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LIBRARY 


University  of  California. 

^IFT  OF-   CTk^.  (Fi^/v^.^^ 
Class 


.  .^...1       'jr  ""^ 


U^^iN-e^f 


THE  UNIVERSAL  SYSTEM 


OF 


PRACTICAL    BOOKKEEPING 


BY 


C.   SNYDER 

EXPERT    ACCO0NTANT,    AND    PRINCIPAL   OF   THE    CHICAGO   SCHOOL   OF   BOOKKEEPING 


ERNEST   L.   THURSTON 

HEAD    OF    DEPARTMENT    OF    BOOKKEEPING    AND    BUSINESS    PRACTICE 
WASHINGTON    (d.C.)    BUSINESS   HIGH    SCHOOL 


NEW  YOEK  .:•  CINCINlSrATI  .:•  CHICAGO 

AMERICAN    BOOK    COMPANY 


PEEFACE 

This  work  is  designed  as  a  text-book  on  theoretical  and  practical  Double-entry  Book- 
keeping, and  is  planned  for  use  in  public  and  private  schools  and  colleges,  and  for  self- 
instruction. 

With  a  view  to  facilitating  the  study  and  mastery  of  the  fundamental  principles  of  the 
subject,  the  theoretical  part  of  the  work  is  made  as  concise  as  possible,  all  unnecessary  or 
unimportant  matter  being  omitted.  At  the  same  time,  subjects  of  importance  to  a  broad 
knowledge  of  the  science,  but  generally  neglected  in  other  text-books,  are  here  given  the 
careful  treatment  their  importance  warrants. 

In  the  short  graded  exercises  and  in  the  detailed  business  series  the  principles  of  book- 
keeping are  applied,  as  they  are  mastered,  to  office  practice,  to  the  recording  of  practical 
business  transactions,  and  to  the  ordinary  routine  of  mercantile  business.  The  series  gives 
practice,  not  only  in  the  use  of  general  and  auxiliary  books  of  entry  and  record,  but  of  many 
common  business  forms  and  papers  as  well. 

Thus  made  fariiiliar  with  the  daily  run  of  office  business  and  with  the  duties  pertaining  to 
positions  he  may  be  called  upon  to  fill,  the  student  will  be  able  to  meet  the  requirements  of 
his  first  situation  without  the  difficulty  which  so  many  beginners  experience  from  lack  of  busi- 
ness knowledge  or  actual  preliminary  office  training. 


->.    ^>_  COPTBIGHT,    1902,    BY 

c.  Snyder  and'  er^xest  l.  thurston. 

•  '  '  '   '£lH<i!RE'l> '  AT   ^TATIOifERs'   HALL,   LONDON. 


TABLE    OF   CONTENTS 


PAET   I.     FUNDAMENTAL   PRINCIPLES   OF   BOOKKEEPING 

PAGE 

Section  I.  —  Definitions  and  Divisions 5 

Section  II-  —  Accounts 5-18 

Accounts  defined  and  illustrated.     Classification  of  Accounts.     Classification  of  Personal  Accounts. 
Classification  of  Balances. 
Section  III.  —  Journalizing 18-24 

Debits  and  Credits  —  how  determined.     The  Journal.     The  Daybook. 
Section  IV.  —  Posting 24:-31 

Posting  from  the  Journal.     The  Ledger.     Trial  Balance. 
Section  V. — Journalizing  Notes  and  Drafts 32-38 


PART   II.     BUSINESS   RECORD 

Section  I.  —  Books  for  Bookkeeping 39-60 

Classification  of  Books.  Auxiliary  Books  described.  Books  of  Entry  described.  Sales  Book. 
Cash  Book.  Journal.  Ledger.  Posting  the  Books  of  Original  Entry.  Bank  Account  —  Check- 
ing.    Cash  Account  —  Balancing.     Monthly  Statements. 

Section  II.  —  Closing  the  Books 60-67 

Why  closed.     Inventories.     The  Books  —  how  closed.     Financial  and  Business  Statements. 

Section  III. — Incidental  Subjects  67-84 

Special  Books  of  Entry  named  and  defined.  Indexes.  Partnership  Books  —  how  opened.  Single- 
entry  Bookkeeping.     Business  of  a  Capitalist  —  Exercises. 


PART  III.     BUSINESS   FORMS 

Section  I.  —  The  Forms  —  their  Use 85-107 

Bills  and  Invoices.  Debit  and  Credit  Memoranda.  Drafts  and  Bills  of  Exchange.  Notes.  Checks 
and  Certificates  of  Deposit.  Money  Orders.  Receipts  and  Vouchers.  Statements  and  Account 
Sales.  Bonds  and  Stock  Certificates.  Express  C.  O.  D.  Envelope.  Freight  Bills  Sbn(t  Receipts. 
Bank  Notices.     Power  of  Attorney.     Letters  of  Credit.     BiUs  of  Sale  and  Assignments. 

Section  II.  —  Negotiable  Paper 107-109 

Indorsements.     Forms  of  Indorsement. 

Section  III.  —  Disposition  op  Notes  and  Drafts 109-110 

Collections.     Discounts.     Protests.     Renewals. 

3 


228739 


•    •  *.♦*  •  •/•  •    • 


TABLE  OF  CONTENTS 


PART   IV.     BUSINESS   PRACTICE 

PAGE 

Section  I.  —  Wholesale  Grocery  and  Produce  Business 111-120 

Exercises. 
Section  II.  —  Commission 121-131 

The  Books  —  their  Use.     Exercises. 
Section  III.  —  Contracting  Business 132-144 

The  Contract  Accounts.     The  Books — their  Use.     Exercises. 
Section  IV.  —  Corporations 144-158 

Organization.      Corporation  Accounts.      Stockholders'   Books.      The   Different   Kinds   of  Stock. 
Corporation  Books  —  how  opened.     Exercises. 
Section  V.  —  Banking 159-176 

Bank  Officers.     The  Books  —  their  Use.     Collections.     Exercises. 


PART  V.     APPENDIX 

Section  I.  —  Clearing  Houses 177 

Section  II.  —  The  Voucher  System 181 

Section  III.  —  The  Safeguard  Account  System 184 

Section  IV.  —  The  Card  Ledger  System     ..       .        .        . 184 

Section  V.  —  The  Loose-leaf  Ledger 186 

Section  VI.  —  Glossary  of  Business  Terms 187 

Section  VII.  —  Signs  and  Abbreviations 189 

Index 190 


J  r 


^ 


THE   UNIVERSAL   SYSTEM 


OF 


PRACTICAL    BOOKKEEPINa 


PART   I.     FUNDAMENTAL  PRINCIPLES   OF   BOOKKEEPING 

SECTION    I.     DEFINITIONS   AND   DIVISIONS 

1.  Bookkeeping  is  the  art  of  recording  the  transactions  of  a  business  in  so  systematic  a 
manner  that  its  condition  can  be  determined  at  any  time. 

2.  Double-entry  Bookkeeping  is  a  system  in  which  a  double  entry  is  made  for  every  trans- 
action. The  entry  usually  consists  of  one  debit  and  one  credit  of  equal  value.  Sometimes 
there  are  several  debits,  or  several  credits,  or  both,  but  in  every  case  the  sum  of  the  debits 

\equals  the  sum  of  the  credits. 

►  \  3.  Accounts.  An  account  is  a  concise  record  of  the  business  transactions  connected  with 
a  certain  thing  or  subject,  or  with  a  certain  person  or  company.  (See,  for  instance,  the  Cash 
account  on  page  6,  and  the  account  of  C.  G.  Field  &  Co.,  on  page  14.)  In  every  account 
the  debits  are  entered  on  the  left-hand  side  and  the  credits  on  the  right-hand  side.  The 
accounts  are  the  most  important  records  in  bookkeeping. 

4.  The  Fundamental  Processes  of  bookkeeping  consist  of  Journalizing  and  Posting. 

5.  Journalizing  is  the  process  of  determining  the  debits  and  credits  involved  in  business 
transactions,  and  of  so  recording  them  that  they  may  be  easily  transferred  to  the  accounts  to 
which  they  refer. 

6.  Posting  is  the  process  of  transferring  the  debits  and  credits  thus  journalized  to  the 
Ledger,  the  book  which  contains  the  accounts. 

SECTION   II.     ACCOUNTS 
Definitions 

7.  Accounts.  An  account  consists  of  an  item,  or  a  collection  of  items,  under  a  distinct 
name,  so  arranged  as  to  indicate  the  result  of  business  transactions.  It  has  two  sides.  Debit 
and  Credit.     The  left-hand  side  is  the  debit,  and  the  right-hand  side  the  credit. 

8.  The  Balance  is  the  difference  between  the  two  sides  of  an  account.  If  one  side  is 
blank,  the  balance  equals  the  sum  of  the  items  of  the  other  side.  An  account  balances  when 
the  two  sides  are  equal. 

9.  Cash  Account,  as  its  name  implies,  shows  what  money  has  been  received  and  has 
been  paid  out. 

5 


6 


FUNDAMENTAL  PRINCIPLES   OF  BOOKKEEPING 


All  cash  received  is  entered  on  the  debit  side,  and  all  cash  paid  out  is  entered  on  the 
credit  side.     The  balance,  if  on  the  debit  side,  indicates  the  cash  on  hand. 


Dr. 


CASH 


Cb. 


Received 

Paid  out 

Investment, 

1500 

00 

Rent  of  store, 

75 

00 

For  10  bbls.  Apples, 

50 

00 

For  Desk  and  Chairs, 

35 

00 

For  100  bbls.  Flour, 

600 

00 

Pay  Roll, 

150 

00 

For  Note  of  E.  A.  Frost, 

75 

00 

For  200  bbls.  Flour, 

800 

00 

Interest  on  above  note. 

7 

50 

For  Note  to  Lord  &  Son, 

150 

00 

For  Note  of  C.  G.  Trude, 

175 

00 

Interest  on  above  note, 

9 

00 

Interest  on  above  note, 

3 

50 

1219 

00 

1192.00 

2411 

00 

i 

10.  Merchandise  Account  indicates  the  cost  of  goods  purchased.  It  is  used  by  almost  all 
firms,  although  a  few,  owing  to  the  nature  of  their  business,  find  it  of  little  value  and  discard 
it  in  favor  of  other  accounts.  In  the  dry  goods  trade,  grocery  trade,  etc.,  a  Merchandise 
account  is  essential. 

It  is  debited  for  the  cost  of  goods  purchased  and  credited  for  goods  returned  by  the  firm, 
or  for  any  shortage  or  overcharge  allowed  to  the  firm.  It  is  credited  also,  at  stated  periods, 
with  the  balance  of  Sales  account.  S 


Dr. 


MERCHANDISE 


Cr. 


Bought 


50  bbls.  Apples, 
200  bbls.  Flour, 
25  bags  Coffee, 


150 
800 
525 

1475 


00 

00 
00 

00 


11.    Sales  Account  shows  the  total  sales  of  a  business. 

The  account  is  credited  when  goods  are  sold,  and  it  is  debited  when  goods  are  returned  to 
the  firm,  or  when  there  is  a  shortage  or  overcharge  allowed  by  the  firm.  At  stated  periods,  in 
order  to  ascertain  the  loss  or  gain  on  goods  sold,  the  balance  is  transferred  to  Merchandise 
account  by  debiting  this  account  and  crediting  Merchandise  account. 


Dr. 


SALES 


Cr. 


Sold 


10  bbls.  Apples, 
100  bbls.  Flour, 
15  bbls.  Apples, 
10  bags  Coffee, 


50  00 
600  00 


75 
350 

1075 


00 
00 

00 


12.  Expense  Account  indicates  various  expenditures  incurred  in  conducting  the  business. 
In  a  small  business  it  is  customary  to  include  in  Expense  account  all  items  which  come  under 
such  headings  as  Freight,  Express,  Fuel,  Gas,  Stationery,  Rent,  Labor,  Office  Salary,  etc.     In 


ACCOUNTS 


a  large  business  a  separate  account  is  opened  for  each  of  these  subjects  and  for  other  expenses, 
such  as  Cartage,  Interest,  Discount,  Exchange,  etc. 

Expense  account  is  debited  when  any  such  expense  is  incurred  by  the  firm,  and  is  credited 
if  the  same  produces  returns  after  Expense  account  is  debited  for  it. 


Dr. 

E 

XPJ 

EiNSE 

Cr. 

Expenditures 

Rent, 

Desk  and  Chairs, 

Pay  Roll, 

75 

35 

150 

260 

00 
00 
00 

00 

13.    Interest  and  Discount  Account  is  debited  when  interest  or  discount  is  paid  or  allowed 
by  the  firm,  and  is  credited  when  interest  or  discount  is  paid  or  allowed  to  the  firm. 


Dr. 


INTEREST    AND    DISCOUNT 


Cr. 


Allowed  by  us 

Allowed  to  us 

Interest  on  note  to  Lord  &  Son, 

9 

00 

Interest  on  note  of  E.  A.  Frost, 
Interest  on  note  of  C.  G.  Trude, 
2.00 

7 
3 
11 

50 
50 

00 

14.  Bills  Receivable  Account  shows  the  amount  of  notes  (page  92)  received  from  other 
firms,  and  time  drafts  (page  89)  payable  to  the  firm  and  accepted  by  other  firms. 

When  these  notes  are  received  and  the  time  drafts  accepted,  the  Bills  Receivable  account 
is  debited,  and  when  they  are  paid,  discounted,  or  sold  the  account  is  credited.  If  a  note  is 
returned  to  the  maker  for  a  new  note,  the  account  is  credited.  In  the  latter  case  the  account 
of  the  maker  is  debited  with  the  old  note,  and  is  also  credited  with  the  new  note,  thus  showing 
the  full  transaction  in  both  accounts. 

The  amount  debited  or  credited  in  Bills  Receivable  account  is  always  the  face  of  the  note 
or  draft.  The  difference  between  face  and  payment,  if  any,  is  either  interest  or  discount, 
and  is  credited  or  debited  in  the  Interest  and  Discount  account.  The  face  of  any  note  or  draft 
is  alwaj^s  debited  in  Bills  Receivable  account  before  it  is  credited. 

The  balance  of  the  account  indicates  the  amount  of  paper  on  hand.  The  account  balances 
whenever  all  the  notes  and  drafts  have  been  paid  or  disposed  of. 


Dr. 


BILLS    RECEIVABLE 


Cr. 


Received  or  Accepted 

Disposed  of 

E.  A.  Frost, 
W.  B.  Murray, 
C.  G.  Trude, 
175.00 

75 
175 
175 

425 

00 
00 

00 

00 

E.  A.  Frost, 
C.  G.  Trude, 

75 
175 

00 
00 

15.  Bills  Payable  Account  shows  the  amount  of  notes  given,  and  drafts  accepted,  by 
the  firm. 

When  the  firm  gives  a  note  or  accepts  a  draft,  the  account  is  credited,  and  when  the 
note  or  draft  is  paid  the  account  is  debited.     If  a  note  is  returned  for  renewal,  the  account 


8 


FUNDAMENTAL  PRINCIPLES   OF  BOOKKEEPING 


is  debited.  In  the  latter  case  tlie  account  of  the  payee  is  credited  with  the  old  note  and 
also  debited  with  the  new  note,  thus  showing  the  full  transaction  in  both  accounts. 

The  amount  credited  or  debited  in  Bills  Payable  account  is  always  the  face  of  the 
note  or  draft.  The  difference  between  face  and  payment,  if  any,  is  either  interest  or 
discount,  and  should  be  debited  or  credited  in  the  Interest  and  Discount  account.  Bills 
Payable  account  is  always  credited  with  the  face  of  any  note  or  draft  before  it  is  debited. 

The  balance  shows  the  firm's  written  obligations  outstanding.  The  account  balances 
whenever  all  the  notes  and  drafts  have  been  redeemed. 


Dr. 


BILLS    PAYABLE 


Ck. 


Redeemed 

Issued  or  Accepted 

Lord  and  Son, 

150 

00 

Lord  and  Son, 

Wood  and  Co., 

525.00 

150 

525 

675 

00 
00 
00 

16.  Loss  and  Gain  Account  receives,  at  stated  periods,  all  balances  of  accounts  which 
show  losses  or  gains,  for  the  purpose  of  determining  the  net  loss  or  net  gain. 

The  losses  are  debit  balances,  and  are  transferred  from  such  accounts  as  show  a 
decrease  in  the  value  of  the  firm's  property,  an  excess  in  the  cost  of  production,  and  the 
general  expenses  of  conducting  the  business. 

The  gains  (profits)  are  credit  balances,  and  are  transferred  from  such  accounts  as  show 
an  increase  in  the  value  of  the  firm's  property  and  the  excess  of  sales  or  returns. 


Dr. 


LOSS   AND    GAIN 


Cr. 


Losses 

GrAINS 

Expense, 

260 

00 

Merchandise, 
Interest  and  Discount, 

92.00 

350 

2 

352 

00 
00 
00 

17.  Stock  Account.  —  The  amount  invested  by  the  proprietor  in  a  business  is  always 
credited  to  his  investment  account,  which  is  called  his  Stock  account. 

The  balance  of  this  account  represents  the  Present  Worth  of  the  proprietor's  business, 
and  is  equal  to  the  difference  between  the  Resources  (that  which  is  due  the  proprietor  in 
property,  merchandise  on  hand,  notes,  and  personal  accounts)  and  the  Liabilities  (that  which 
he  owes,  such  as  notes  and  personal  accounts). 


Dr. 


JOHN    FULLER    (Stock) 


Cr. 


Withdrew 


Cash, 
Gain, 


Investment 


1500 
92 

1592 


00 

00 

00 


To  THE  Teacher.  —  Before   taking   up   Exercise  1,  the  students  should  be   familiar  with  the  common 
forms  of  notes  and  drafts,  and  should  understand  the  meaning  of  the  term  "acceptance."     See  pages  88-93. 


ACCOUNTS 


EXERCISE   1 


Rule  in  a  blank  book  nine  skeleton  accounts  and  enter  the  following  items,  according 
to  the  foregoing  illustrations.     For  illustration  of  script,  see  pages  10,  11. 

Cash. — Amount  invested,  81500.  Paid  for  rent,  $75.  Paid  for  stationery,  fl5.  Paid 
for  stock  of  groceries,  $500.  Received  of  John  Smith,  $75.  W.  B.  Ray  &  Co.  paid  their 
note,  $58.  Received  for  cash  sales,  $175.  Paid  for  services,  $75.  Paid  for  gas,  $9.50. 
Received  cash  for  J.  B.  Miller's  note,  $162.50.  Paid  railroad  fare,  $1.25.  Borrowed  from 
the  bank  on  my  note,  $194.25.  Paid  for  postage  stamps,  $4.00.  Paid  freight  charges, 
$2.75.     Paid  draft  of  Reid,  Smith  &  Sons,  $175.50. 

Merchandise.  —  Bought,  for  cash,  stock  of  groceries  valued  at  $500.  Bought  10  barrels 
apples  for  '^'db.,  and  gave  in  payment  Mrs.  W.  B.  Warren's  note.  Bought  of  Reid,  Smith  & 
Sons,  on  our  acceptance,  bill  of  goods  amounting  to  $175.50.  Bought  of  Puller  &  White,  on 
our  note,  bill  of  goods  amounting  to  $  150. 

Sales.  —  Sold  John  Smith,  for  cash,  bill  of  goods  amounting  to  $78.75.  Sold  H.  M. 
Watson  &  Co.,  on  their  note,  bill  of  goods  amounting  to  $165.  Sold  W.  B.  Ray  &  Co.,  on 
their  note,  bill  of  goods  amounting  to  $55.  Sold  M.  E.  Kimball  &  Co.,  on  account,  bill  of  goods 
amounting  to  $200.  M.  E.  Kimball  &  Co.  returned  5  barrels  flour,  $25.  Sold  merchandise, 
for  cash,  as  per  cash  sales  checks,  $175. 

Expense.  — Paid  for  rent,  $75.  Paid  for  services,  $75.  Paid  for  gas,  $9.50.  Paid  for 
stationery,  $15.  Paid  for  railroad  fare,  $1.25.  Paid  for  postage  stamps,  $4.  Paid  freight 
charges,  $2.75. 

Interest  and  Discount.  —  A\\o\Yedi  discount  to  John  Smith  on  bill  of  goods,  $  3.75.  Received 
cash  for  interest  on  W.  B.  Ray  &  Co's.  note,  $3.  The  bank  discounted  our  note,  deducting 
6^  discount,  $5.75.     Paid  discount  on  J.  B.  Miller's  note,  $2.50. 

Bills  Receivable.  —  In  the  safe  are  the  following  notes:  J.  B.  Miller,  $165;  Cleveland 
Supply  Co.,  $155.75  ;  Mrs.  W.  B.  Warren,  $35.  Received  of  H.  M.  Watson  &  Co.,  to  bal- 
ance account,  their  note  for  $165.     Received  of  W.  B.  Ray  &  Co.,  to  balance  account,  their 

note  for  $55.     Sold  J.  B.  Miller's  note,  $ .     M.  E.  Kimball  &  Co's.  draft,  payable  to  the 

proprietor   at   15   days'    sight  for   $  175,    to   balance    account,   is   accepted   by   the    drawee. 

W.'  B.  Ray  &  Co.  paid  their  note,  $ .     Gave  Mrs.  W.  B.  Warren's  note,  $ ,  in  payment 

for  a  bill  of  goods. 

Bills  Payable.  — Gave  Fuller  &  White  our  note  for  $150,  in  payment  for  a  bill  of  goods. 
Accepted  five  days'  sight  draft  drawn  on  us  by  Reid,  Smith  &  Sons,  for  a  bill  of  groceries 
amounting  to  $175.50.  Borrowed  of  the  Students'  National  Bank  $200,  giving  the  bank  our 
note  for  the  amount.     Paid  Reid,  Smith  &  Sons'  draft,  $ . 

Stock.  The  proprietor  (the  student)  invested  cash,  $  1500  and  three  notes,  which  were 
placed  in  the  safe,  amounting  to  $355.75. 

Notp:.  —  The  following  process  will  enable  the  student  to  find  out  whether  the  sum  of  all  the  debits  ecjuals 
the  sum  of  all  the  credits  in  the  accounts  of  Exercise  1. 

First.  Add  the  items  on  each  side  of  each  account,  writing  the  sum  in  pencil ;  and  determine  the  balance 
of  the  account.  On  the  greater  side  write  the  balance  (if  the  account  has  items  on  both  sides)  in  small  figures 
below  the  written  items.     (See  illustrations  on  pages  6,  7,  8.) 

Second.  Prepare  a  page  with  two  money  columns  at  the  right-hand  side.  Name  the  first  column  debit  and 
the  other  credit.  Copy  the  titles  and  balances,  entering  each  balance  in  the  column  in  which  it  appears  in  its 
account.  When  all  the  balances  have  been  copied,  rule  and  add  the  columns,  whose  footings  will  agree  if  the 
accounts  have  been  debited  and  credited  correctly.     (See  illustration  on  page  27.) 

18.  The  process  described  in  the  above  note  is  called  "taking  off  a  trial  balance."  It  is 
an  important  test  of  the  bookkeeper's  accuracy  ;  for  whenever  the  footings  of  the  trial  balance 
are  unequal,  it  shows  that  a  mistake  has  been  made. 


10 


FUNDAMENTAL  PRINCIPLES   OF  BOOKKEEPING 


Ledger 


B.C.7ncUujrt(3tkrcA. 


TSalarruabfPAJLb.  uuo'itA}     520/  2 


520/ 


25 


llljLnxJvGurhdAAjb 


focblayyhCJb 


3000 

2000 

201 


520/ 


520/ 


00 
00 
25 


25 


25 


CR. 


140  -inAJ).  PcrtoJjyib 
5-^^6.0^1^1116 


3000 
U5 
25 

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00 
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20'lM6.CipfJjL6 

Poj^'RUt 


95 

75 

15 

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3q  5 


00 
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00 

00 


TKlMixJiMjTvdjJiJL 


CR. 


JnUMAt.  UOO  Mrl6.  JlcruUh 
20Ml6.(lfipA6 
boo-in^.  PotaZo^ 

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2000 

15 
U50 

52/ 


30L/b25 


00 
00 
00 

2. 


SqJjl6 


/510 
/Ulb 


30Ub 


00 
25 


25 


DR. 


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7TloixJ\xLrn/£i6JL 


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5      „      (Jjip/jL6 
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25 
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Pom.  JIM 

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75 
/50 

Q5 
320 


00 
00 
00^ 
00 


Lo6J^  curuL  Q/cuuTu 


320 


320 


CR. 


w 


00 


ACCOUNTS 


11 


Ledger  —  Continued 


IS-Mb  TljU:JiAAJX2jj~ijL 

Q.SucbrujM  9J-  Co. 

ma.  LolcL  ^  Co. 

B.C.J^(OXTX£9^CO. 

350 
500 
b50 

/  5  0  0 

00 
00 
00 

0  0 

13  bill)  l^OjUKxIrlL 

WjM  13mx>6.  Go. 

q.m.SAudcu 

200 
250 

U  5  0 

00 
00 

0  0 

DR.                          £xyAd  OjmycL  (jaxajH^                         cr. 

TbiZ  (Icu/n  (D.  C.  TTZoAori 

320^ 
,   20/ 

00 
25 

iTljinxJuj/rvdiAsL 

521 

25 

521 

25 

521 

25 

Note.  —  If  the  transactions  of  Exercise  1  were  entered  correctly,  the  trial  balance  should  be  the  same  as 
the  following : 

Trial  Balance 


Page 

Debit 

Credit 

Cash, 

Merchandise, 
Sales, 
Expense, 

Interest  and  Discount, 
Bills  Receivable, 
Bills  Payable, 
Stock, 

1306 
860 

182 

9 

495 

75 
50 

50 
00 

75 

648 

350 
1855 

75 

00 
75 

2854 

50 

2854 

50 

The  student  should  explain  to  the  teacher,  from  the  trial  balance,  what  is  indicated  by 
the  balance  of  each  account. 


12  FUNDAMENTAL  PRINCIPLES   OF  BOOKKEEPING 

19.  To  Find  the  Present  Worth  (Exercise  1).  First. — Find  out  which  accounts  show  a 
loss  or  a  gain,  and  transfer  the  balance  of  each  (representing  the  loss  or  the  gain)  to  Loss  and 
Gain  account,  as  follows  :  — 

(a)  Transfer  the  balance  of  Sales  account  to  Merchandise  'account  by  entering  it  first  in 
red  ink  on  the  debit  side  of  Sales  account,  and  afterward  in  black  ink  on  the  credit  side  of 
Merchandise  account.  (See  note  below,  and  see  illustration  in  Sales  and  Merchandise  accounts 
on  page  10.)  Since  the  balance  of  our  Sales  account  is  $648.75,  these  entries  will  be  as 
follows  :  On  the  debit  side  of  Sales  account,  "  Merchandise  648.75"  ;  and  on  the  credit  side 
of  Merchandise  account,  "  Sales  648.75."  Next,  in  Merchandise  account  insert  in  red  ink  on  the 
credit  side  the  total  value  of  the  goods  remaining  unsold  (called  "Inventory"),  $441.25. 
(For  style  of  entry,  see  illustration,  page  10.)  Next,  add  and  find  the  balance,  which  is  a 
gain,  as  it  is  on  the  credit  side.  Next,  transfer  this  amount  to  Loss  and  Gain  account  by 
entering  it  first  in  red  ink  on  the  debit  side  of  Merchandise  account  and  then  in  black  ink  on 
the  credit  side  of  Loss  and  Gain  account.  (For  style  of  entries,  see  illustration,  pages  10 
and  11.) 

(6)  Transfer  the  balance  of  Expense  account  to  Loss  and  Gain  account  by  entering  the 
balance  first  in  red  ink  on  the  credit  side  of  Expense  account,  and  then  in  black  ink  on  the 
debit  side  of  Loss  and  Gain  accounto     (See  illustration,  pages  10  and  11.) 

(c)  Transfer  the  balance  of  Interest  and  Discount  account  to  Loss  and  Gain  account  by 
entering  the  balance  first  in  red  ink  on  the  credit  side  of  Interest  and  Discount  account,  and 
then  in  black  ink  on  the  debit  side  of  Loss  and  Gain  account. 

Second.  —  When  all  losses  and  gains  have  been  transferred  to  Loss  and  Gain  account, 
determine  whether  the  business  has  lost  or  gained.  Next,  transfer  the  balance  to  the  Stock 
account  by  balancing  Loss  and  Gain  account.     (See  illustration,  pages  10  and  11.) 

Third.  —  Rule  off  Merchandise  account  and  bring  down  the  inventory  to  the  debit  side, 
writing  it  in  black  ink.  Next,  rule  off  with  red  ink  lines  Expense  account.  Interest  and  Dis- 
count account.  Sales  account,  and  Loss  and  Gain  account.  (See  note  below,  and  illustration, 
pages  10  and  11.) 

Now  insert  in  red  ink  on  the  debit  side  of  Stock  account  its  present  worth  (balance) ;  then 
rule  and  add.  Next,  bring  down  the  balance  in  black  ink  to  the  opposite  side  from  that  of  the 
red  ink  entry.  (See  illustration,  page  10.)  Finally,  report  to  the  teacher  the  present  worth 
of  the  business. 

Note. —  When  red  ink  is  used  in  accounts,  such  as  are  mentioned  above,  it  signifies  that  no  actual  transac- 
tion is  represented  by  the  item,  and  that  no  corresponding  entry  has  yet  been  made.  In  order  to  make  the  entry 
double,  the  amount  must  later  be  entered  (in  black  ink)  either  on  the  opposite  side  of  the  same  account  (after  it 
is  ruled)  or  in  some  account  to  which  the  amount  has  been  transferred,  as  the  case  may  be. 

The  lines  used  for  ruling  off  accounts  should  be  made  with  red  ink.  The  double  line  drawn  under  the  totals 
(see  pages  10  and  11)  signifies  a  new  beginning  for  the  account;  when  the  account  is  next  footed  up,  the  items 
above  the  double  line  are  not  to  be  included. 

Classification  of  Accounts 

20.  Accounts  are  divided  into  two  classes,  —  Representative  and  Personal. 

21.  Representative  Accounts  are  those  accounts  of  a  business  which  represent  the  firm  and 
designate  the  character  of  its  transactions.  Examples :  Cash,  Merchandise,  Sales,  Expense, 
Furniture  and  Fixtures,  Bills  Receivable,  etc. 

A  representative  account  is  debited  when  the  firm  receives  anything  of  value,  and  it  is 
credited  when  the  firm  gives  out  anything  of  value. 

For  example,  when  cash  is  received,  Cash  account  is  debited ;  when  merchandise  is  sold. 
Sales  account  is  credited ;  when  postage  stamps  are  bought,  Expense  account  is  debited ; 
when  discounts  are  deducted  and  allowed  by  the  firm.  Discount  account  is  debited. 


ACCOUNTS 


13 


22.  Personal  Accounts  are  the  ones  with  individuals,  firms,  and  corporations,  and  show 
their  rehitions  with  the  business. 

The  debit  side  of  a  personal  account  denotes  the  Debtor  —  one  who  owes  the  firm  ;  and 
the  credit  side  the  Creditor  —  one  whom  the  firm  owes. 

A  personal  account  is  debited  when  the  person  represented  receives  anything  of  value 
from  the  firm,  and  is  credited  when  he  gives  any  valuable  thing  to  the  firm. 

For  example,  when  John  Seymour  &  Co.  receive  merchandise  on  account,  John  Seymour 
&  Co.'s  account  is  debited  ;  when  C.  B.  Lord  renders  services,  his  account  is  credited  ;  when 
he  is  paid  for  them  in  cash,  his  account  is  debited.  ' 

Classification  of  Personal  Accounts 

23.  Personal  accounts  are  divided  into  five  or  more  classes,  viz. :  The  accounts  of  Partners, 
Traveling  Agents,  Consignors  or  Consignees,  Customers,  and  those  from  whom  the  firm  buys 
its  goods. 

24.  The  Partners'  Accounts.  —  Each  of  the  partners  in  a  firm  has  at  least  two  accounts,  as 
follows  :  — 

1.  The  partner's  Stock  account  is  credited  with  his  investment  in  the  business,  such  as 
cash,  merchandise,  bills  receivable,  etc.  It  is  also  credited  with  his  share  of  the  net  gain, 
or  debited  with  his  net  loss. 


Dr. 


M.  A.  YORK  (Stock) 


Cr. 


Received 


Gave 


Cash, 
Note, 


1500 


00 


300  00 


2.  The  partner's  Private  (personal)  account  is  debited  with  the  money  drawn  out  for 
personal  use,  and  is  credited  with  salary  (the  fixed  amount  at  which  services  are  valued),  at 
the  end  of  each  month.  No  partner  is  supposed  to  draw  more  than  his  salary,  unless  by 
mutual  consent. 


Dr. 


M.  A.  YORK  (Private) 


Or. 


Received 

Gave 

Cash, 
Cash, 

15 

75 

00 
00 

Salary  {i.e.  services), 

150 

00 

25.  The  Traveling  Agents*  Accounts. — Each  of  the  traveling  agents  has  two  or  more 
accounts :  — 

1.  His  Expense  account  is  debited  with  all  mileage  books,  railroad  tickets,  and  moneys 
furnished  him  by  the  firm  for  expenses,  and  is  credited,  at  the  end  of  the  month,  with  the 
statement  of  his  expenses. 

"W.    A.    SEYMOUR   (Expense) 


Received 

Gave 

Mileage  Book, 
Cash, 

50 
100 

00 
00 

Traveling  Expense, 

135 

00 

14 


FUNDAMENTAL  PRINCIPLES   OF  BOOKKEEPING 


2.    His  Private  (salary)  account  is  debited  with  all  money  drawn  out  for  private  use, 
and  is  credited  with  salary  at  the  end  of  each  month. 

"W.    A.    SEYMOUR   (Personal) 


Eeceived 

Gave 

Cash, 
Cash, 

50 
35 

00 
00 

Salary  (i.e.  services). 

150 

00 

Note.  —  A  traveling  agent  may  have,  besides  the  two  accounts  mentioned,  a  Commission  account,  a  Sample 
account,  and  a  Collection  account. 

26.  The  Consignment  Accounts  indicate  the  value  of  merchandise  shipped  or  received 
on  consignment.  The  distinction  between  consignment  and  other  accounts  is  made  to  enable 
one  to  know  what  goods  are  on  consignment  and  what  are  not  on  consignment,  but  to  be 
paid  for  at  a  fixed  price  and  at  a  given  time.  (Merchandise  when  shipped  or  received  on 
consignment  is  not  paid  for  until  sold.) 

C.    G.    ROBINSON    (Consignment) 


Eeceived 

Gave 

25  bbls.  Flour, 
10  bbls.  Apples, 

125 

40 

00 
00 

Cash, 

100 

00 

Note.  —  When  more  than  one  consignment  is  shipped  to  a  firm,  each  one  should  be  numbered.     A  separate 
account  is  generally  kept  of  each  consignment. 


27.    The  Customers'  Accounts  are  the  accounts  of  the  parties  to  whom  goods  are  sold  on 
credit. 

C.    G.    FIELD   &   CO. 


Received 

Gave 

10  bbls.  Sugar, 

5  bbls.  Apples, 

6  bbls.  Apples, 
1  bbl.  Flour, 

162 
25 

27 
5 

50 
00 
00 
00 

Cash, 

2  bbls.  Apples  ret'd, 

100 
10 

00 
00 

28.    The  Purchase  Accounts  are  the  accounts  of  the  parties  from  whom  goods  are  purchased. 

MURDOCK   &   CO. 


Received 

Gave 

Cash, 
Note, 

400 
202 

00 
50 

50  bbls.  Sugar, 
25  bbls.  Apples, 
10  bbls.  Flour, 

487 
75 
40 

50 
00 
00 

Note.  —  The  distinction  between  Customers'  accounts  and  Purchase  accounts  is  a  matter  of  convenience  in 
a  large  business ;  but  in  a  small  one  it  might  not  be  made. 


ACCOUNTS  16 


EXERCISE  2 


Rule,  in  proper  form,  eighteen  skeleton  accounts,  allowing  ten  lines  for  Cash  account  and 
five  lines  each  for  all  other  accounts,  and  then  debit  and  credit  the  necessary  accounts  in  each 
of  the  following  transactions  : 

(The  name  of  the  firm  is  D.  C.  Clark  &  Co.  The  partners  are  D.  C.  Clark  and 
M.  A.  Carter.  The  partners  invest  equally  and  the  net  gain  or  the  net  loss  is  to  be  divided 
equall3^) 

1.  D.  C.  Clark  invests  cash,  $1500. 

2.  M.  A.  Carter  invests  cash,  $1500. 

3.  Bought  merchandise  of  C.  M.  Hay  &  Co.  on  account,  as  shown  by  their  invoice  (see 
page  86),  $268.75. 

4.  Shipped  merchandise  to  the  following  firms  on  account :  — 

C.  M.  Frost  &  Co.  as  per  invoice  rendered,  $  100. 
A.  B.  Rider  as  per  invoice  rendered,  $275. 

5.  A.  B.  Rider  returned  merchandise  as  defective,  amounting  to  $27.50. 

6.  Bought  merchandise  of  W.  B.  Sanborn,  on  account,  as  per  his  invoice,  $250. 

7.  Gave  to  C.  M.  Hay  &  Co.,  in  full  payment  of  account,  our  note  for  $268.75. 

8.  Received  of  A.  B.  Rider,  to  apply  on  his  account,  cash,  $47.50. 

9.  Received  of  A.  B.  Rider,  to  balance  his  account,  his  note  for  $200. 

10.  Paid  our  note  in  favor  of  C.  M.  Hay  &  Co.  $ . 

11.  Gave  W.  A.  Seymour,  our  traveling  agent,  for  expenses,  cash,  $100. 

12.  Paid  M.  A.  Carter  (partner)  on  account,  $150. 

13.  Paid  for  rent,  $  100. 

14.  Paid  for  help  in  store,  $48.50. 

15.  Shipped  to  A.  B.  Rider,  on  consignment,  bill  of  merchandise  amounting  to  $150. 

16.  Gave  Mrs.  W.  A.  Seymour  $75,  charging  it  to  Mr.  Seymour's  account. 

17.  Accepted  W.  B.  Sanborn's  draft  on  us  for  $250,  to  balance  account. 

18.  Gave  W.  A.  Seymour  credit  for  one  month's  salary,  $  75. 

19.  Credited  the  account  of  each  partner  with  one  month's  salary,  $150. 

EXERCISE   3 

1.  Draw  off  a  trial  balance.  (See  page  9.)  2.  Ascertain  whether  the  business  has  gained 
or  lost  (merchandise  remaining  unsold — Inventory  —  is  $300),  and  transfer  the  net  gain  or 
net  loss  to  the  Stock  accounts,  dividing  it  between  the  partners. 

Classification  of  Balances 

29.  Balances  are  divided  into  four  classes  :   Resources,  Liabilities,  Losses,  and  Gains. 

30.  The  Resources  (Assets)  indicate  what  the  firm  owns. 

Resources  are  debit  balances  of  the  debtors'  accounts,  bills  receivable,  cash  on  hand,  and 
the  inventories  of  such  of  the  representative  accounts  as  are  charged  with  stock  or  property  on 
hand. 

31.  The  Liabilities  indicate  what  the  firm  owes. 

Liabilities  are  credit  balances  of  the  creditors'  accounts  and  bills  payable. 

32.  When  the  resources  are  in  excess  of  the  liabilities  the  firm  is  solvent  (able  to  pay  all 
debts),  but  when  the  liabilities  are  in  excess  of  the  resources  it  is  insolvent  (unable  to  pay  all 
debts). 


16 


FUNDAMENTAL   PRINCIPLES   OF  BOOKKEEPING 


33.  The  Losses  are  the  debit  balances  of  such  representative  accounts  as  show  a  decrease 
in  the  value  of  the  property,  an  excess  in  the  cost  of  production,  and  the  general  expenses  of 
conducting  a  business ;  also  such  bills  receivable  and  the  balances  of  such  debtors'  accounts 
as  are  considered  worthless. 

34.  The  Gains  (Profits)  are  credit  balances  of  such  representative  accounts  as  show 
increase  in  the  value  of  the  property,  and  an  excess  of  sales  or  returns. 

35.  When  the  losses  are  in  excess  of  the  gains  the  business  shows  a  net  loss,  but  when  the 
gains  are  in  excess  of  the  losses  it  indicates  a  net  gain. 

EXERCISE   4 

Prepare  two  pages  with  two  columns  each  at  the  right-hand  side.  Name  one  page 
Resources  and  Liabilities,  and  the  other  Losses  and  Gains. 

Examine  the  following  accounts  and  copy  the  resources  and  the  liabilities  on  their  special 
statement.  First,  copy  the  resources,  entering  their  amounts  in  the  debit  column.  Next, 
copy  the  liabilities,  entering  the  amounts  in  the  credit  column.  Then  draw  a  line  and  add 
each  column  to  ascertain  whether  the  business  is  solvent  or  insolvent.  Next,  write  the  balance 
of  the  Stock  account  in  the  proper  column,  and  add  again,  which  should  make  the  footings 
equal.  Now  take  off  the  losses  and  gains,  making  a  copy  of  the  Loss  and  Gain  account. 
First,  copy  the  losses,  entering  the  amounts  in  the  debit  column.  Next,  copy  the  gains,  enter- 
ing the  amounts  in  the  credit  column,  and  write  the  net  loss,  with  its  amount,  in  red  ink. 
Finally  add  the  columns,  whose  footings  will  be  the  same  as  those  of  the  Loss  and  Gain 
account. 

Ledger 

D.    C.    "WALLACE    (Stock) 


Loss, 

Balance  (Present  Worth), 


171 


7828.  )0 


8000 


50 


00 


Cash, 

Merchandise, 
Real  Estate, 

Balance, 


2000 
1000 
5000 


8000 


7828 


00 
00 
00 
00 


50 


CASH 


D.  C.  Wallace, 

2000 

00 

Pay  Eoll, 

175 

00 

W.  B.  Cook  &  Co., 

200 

00 

Rent, 

150 

00 

2200 

00 

Furniture  and  Fixtures, 

75 

00 

A.  M.  Gibson, 

150 

550 

00 

00 

MERCHANDISE 


D.  C.  Wallace, 
Loss  and  Gain, 


Inventory, 


1000 
233 


1233 

875 


00' 

50 
50 


Sales, 
Inventory, 


358 


875  50 


1233 


00 


50 


ACCOUNTS 


17 


Ledger — Continued 
EXPENSE 


Rent, 
Pay  Roll, 
Traveling  Expense, 


150 

175 

75 

400 


00 
00 
00 


00 


Loss  and  Gaiu, 


400 


400 


00 


00 


SALES 


George  Price  Co., 
Merchandise, 

7 
358 

50 
00 

W.  B.  Cook  &  Co., 
George  Price  Co., 

300 
65 

00 
50 

365 

50 

365 

50 

FURNITURE    AND    FIXTURES 


Desks  and  Chairs, 

75 

00 

Inventory, 
Loss  and  Gain, 

70 
5 

00 
00 

75 

00 

75 

00 

Inventory, 

70 

00 

REAL    ESTATE 


D.  C.  Wallace, 
Inventory, 


5000 
5000 


00^ 

00 


Inventory 


5000  00 


A.    M.    GIBSON    (Expense) 


Cash, 


150 


00 


Traveling  Expenses, 


Vo 


00 


V;^-.    B.    COOK    &    CO.,    St.    Louis,    Mo. 


Sales, 


300 


00 


Cash, 


200  00 


GEORGE    PRICE    CO.,    Rockford,    111. 


Sales, 


65 


50 


Goods  Returned, 


50 


LOSS    AND    GAIN 


Expense, 

Furniture  and  Fixtures, 

400 

5 

00 
00 

Merchandise, 

D.  C.  Wallace  (Net  Loss), 

233 
171 

60 

50 

405 

00 

405 

00 

— 

18  FUNDAMENTAL   PRINCIPLES   OF  BOOKKEEPING 

QUESTIONS 

1.  What  is  Bookkeeping?  2.  What  is  meant  by  Double-entry  Bookkeeping?  3.  Name  the  funda- 
mental processes  and  define  each  one.  4.  What  is  an  account?  5.  What  is  the  balance  of  an  account? 
6.  When  does  an  account  balance?  7.  What  is  shown  by  Cash  account?  8.  When  is  it  debited  and  when 
credited?  9.  What  account  shows  the  cost  of  goods  purchased?  10.  Explain  its  debit  and  credit  sides. 
11.  What  does  Sales  account  represent?  12.  When  is  its  balance  transferred  to  Merchandise  account? 
13.  What  is  charged  to  Expense  account?  14.  Mention  some  items  that  are  generally  charged  to  Expense 
account  when  separate  accounts  are  not  desired.  15.  When  is  Interest  and  Discount  account  opened? 
16.  What  does  Bills  Receivable  account  contain?  17.  What  is  shown  by  Bills  Payable  account?  18.  In 
what  account  are  entered  at  stated  periods  the  losses  and  gains  in  a  business?  19.  Mention  some  items  that 
would  be  entered  on  the  debit  side  of  Loss  and  Gain  account.  20.  What  accounts  show  gains?  21.  Name 
and  explain  the  accounts  which  show  the  investments  in  a  business.  22.  How  are  accounts  classified  ?  23.  Tell 
what  each  class  represents.  24.  Into  how  many  classes  are  personal  accounts  divided?  Name  them. 
25.  How  many  accounts  should  each  partner  have  ?  26.  Which  account  shows  the  investment  ?  27.  On  which 
side  of  the  account  is  the  gain  entered  and  on  which  side  the  loss  ?  28.  Define  the  traveling  agents'  accounts. 
29.  When  are  consignment  accounts  necessary  ?  30.  Give  a  transaction  for  which  a  customer's  account  must  be 
opened.  31.  A  purchase  account.  32.  How  are  balances  classified?  33.  What  are  assets?  34.  Mention  some 
items  that  are  classed  as  assets.  35.  What  are  liabilities?  36.  How  are  they  distinguished  on  the  Ledger? 
37.  When  is  a  firm  solvent  and  when  insolvent?  38.  What  accounts  show  losses  and  what  show  gains? 
39.  When  the  gains  are  in  excess  of  the  losses  what  does  it  indicate  ?  40.  What  is  the  rule  for  determining 
whether  a  representative  account  is  to  be  debited  or  credited?  41.  A  personal  account?  42.  What  items  are 
entered  in  red  ink,  and  what  does  the  use  of  red  ink  indicate  ? 

SECTION  III.    JOURNALIZING 

36.  Journalizing  is  the  process  of  determining  the  debits  and  credits  involved  in  business 
transactions,  and  of  so  recording  them  that  they  may  be  easily  transferred  to  the  accounts  to 
which  they  refer. 

37.  In  journalizing  a  transaction  there  are  always  at  least  two  accounts  involved  :  one  is 
usually  a  representative  and  the  other  a  personal  account,  or  both  accounts  may  be  representative. 
Sometimes  there  are  more  than  two.     For  example  :  — 


Debit. 

Credit. 

Dr. 

Cr. 

Merchandise 

26.75 

W.  M.  Graham 

26.75 

Invoice,  January  5. 

D.  M.  Pierce 

26.00 

Sales 

25.00 

Sold  5  barrels  apples  at  $5. 

-. D.  C.  Clark  Stock 

1000.00 

Merchandise 

500.00 

Bills  Receivable.     _____             _                             

500.00 

Investment  as  per  contract. 

Merchandise 

120.50 

F.  C.  Murdock 

95.50 

Invoice,  February  15         50.00 

Invoice,  February  18        45.50 

. Wheeler  &  Co. 

25.00 

Invoice,  February  4  25.00 


JOURNALIZING 

Bills  Receivable 

Merchandise 

Bills  Payable 

C.  G.  Mills  Stock 

Investment  as  per  contract. 


500.00 
500.00 


19 


200.00 
800.00 


Debits  and  Credits  —  How  Determined 

38.  An  Original  Entry  is  a  record  of  one  or  more  debits  and  one  or  more  credits,  followed 
by  a  sufficient  explanation.     The  sum  of  the  debits  must  always  equal  the  sum  of  the  credits. 

39.  General  rules  for  journalizing:  — 

1.    Debit  (charge)  a  representative  account  with  what  is  received  by  the  firm.      Credit  a 
personal  account  with  what  the  person  gives  to  the  firm,  or  for  the  firm's  use. 

Ex.  — Bought  of  R.  T.  Cooper  one  house  and  lot  for  $8000. 

Real  Estate  account  (representative)  is  debited  because  the  property  is  bought  (received)  by  the  firm,  and 
R.  T.  Cooper's  account  (personal)  is  credited  because  R.  T.  Cooper  sells  (gives)  it  to  the  firm.     The  entry  is  thus  :  — 


Real  Estate - 


8000.00 


R.  T.  Cooper 

Bought  one  house  and  lot. 


8000.00 


2.    Debit  (charge)  a  personal  account  with  what  the  person  receives  from  the  firm.      Credit 
a  representative  account  with  what  the  firm  gives  out. 

Ex.  —  Shipped  to  John  Sawyer  &  Co.  5  barrels  apples,  $25. 

John  Sawyer  &  Co.'s  account  (personal)  is  debited  because  John  Sawyer  &  Co.  receive  the  goods,  and  Sales 
account  (representative)  is  credited  because  the  firm  sells  the  goods  (gives  them  out).     The  entry  is  thus :  — 


John  Sawyer  &  Co 

Sales 

Sold  5  barrels  apples. 


25.00 


25.00 


3.  Debit  or  charge  the  account  which  receives  an  amount.  Credit  the  account  which 
gives  out  an  amount.  This  is  the  general  rule ;  it  includes  both  the  above,  and  also  such 
transactions  as  the  following  :  — 

Ex.  —  Bought  200  bushels  potatoes  for  f  120  in  cash. 

Merchandise  account  (representative)  is  debited  because  the  potatoes  are  purchased  (received)  by  the  firm, 
and  Cash  account  (representative)  is  credited  because  the  firm  pays  the  money  (gives  out  the  cash).  The  entry 
is  thus :  — 


Merchandise. 


120.00 


Cash 

Bought  200  bushels  potatoes. 


120.00 


The  Journal 

40.  The  Journal  should  contain  all  the  original  entries  of  the  transactions  of  a  business, 
provided  it  is  the  only  Book  of  Original  Entry.  It  has  two  columns  on  the  right-hand  side  of 
the  page.     The  left-hand  column  is  the  debit  and  the  right-hand  column  the  credit. 

Large  houses  and  many  smaller  ones  distribute  their  original  entries  among  several  dif- 
ferent books,  which  will  be  explained  later. 


20 


FUNDAMENTAL  PRINCIPLES   OF  BOOKKEEPING 


41.  "Sundries,"  in  bookkeeping,  means  more  than  one.  This  word  is  used  in  making  sucii 
Journal  entries  as  have  more  than  one  debit,  or  more  than  one  credit,  or  both.  It  indicates 
that  under  it  the  names  of  the  accounts  will  appear.     Thus  :  — 


Sundries 

Merchandise 

Sundries 

340.00 

Expense 

40.00 

___. Walter  Ellis 

300.00 

Invoice, 

March  5. 

.__.Cash 

80.00 

Journal 


'/njjn/ijj.  /on/ 


LEDGER 
PAGE 


DEBIT 


CREDIT 


DEBIT 


CREDIT 


7 


CojJl 


2 

iTt.JuorJujJxnyxjLStovA 
JruMjJjmjbnnJt. 

—3 — ^ 


iTUUuiJvcLrrvcLuisb 

IScrbUoJbt  /:i50  ihMd.  ujAjuxt  @$/.00 

L/' 


S(>lcL  250  AbUi.uuAjuzt  @S  /-/O 


CajJh 

C/xjJh  Aa2jL6  ol6  pji/L  cxza/l  A<z/jl6  cAjuJtd 

7- 


SuyrudnJjLb  U/Ao/Ji.  %  Co. 

CxxArv  Otl  cuycxruunt 

30  cboA^  ThcrtjL  to  -i^xxZoyruzn  cuocxrbunZ 
—JO 


5000 


1250 


2J5 


15 


75 
200 


1000 


00 


00 


00 


00 


00 
00 


00 


5000 


I2J50 


2^5 


75 


2J5 


moo 


00 


00 


00 


00 


00 


00 


JOURNALIZING 


21 


42.  ''To,"  a  word  which  is  often  used  in  making  Journal  entries,  may  be  omitted,  as  it  has 
no  significance. 

Note.  —  When  used,  ''To"  is  inserted  before  the  name  of  each  account  credited.  Similarly,  in  some  other 
books,  "  To  "  is  inserted  before  the  name  of  an  account  credited,  or  before  the  items  (explanation)  with  which  an 
account  is  debited ;  and  "  By  "  is  inserted  before  the  name  of  an  account  debited,  or  before  the  items  with  which 
an  account  is  credited.     But  it  is  better  to  omit  these  words. 

43.  Rulings.  It  will  be  noticed  in  the  specimen  Journal,  page  20,  that  a  line  is  left  blank, 
or  blank  except  for  the  day  of  the  month,  before  each  entry.  So  also  in  the  Daybook  below 
and  in  some  other  books.  It  is  the  custom  with  many  bookkeepers  (if  they  have  ample  time) 
to  draw  a  horizontal  red  ink  line  in  each  of  these  blank  spaces,  as  shown  in  the  specimen 
Journal  on  page  20  ;  and  the  student  should  do  so  in  his  practice  work.  The  lines,  though 
not  essential,  add  to  the  appearance  and  clearness  of  the  book. 

>foTK.  —  Red  ink  ruling,  for  space  lines,  columns,  or  underscoring  words,  is  effective  on  any  business  paper. 
The  student  sliould  practice  ruling  at  every  opportunity  until  he  can  draw  clean,  sharp  lines,  either  with  an 
ordinary  pen  or  with  a  bookkeeper's  ruling  pen. 


The  Daybook 

44.  The  Daybook,  sometimes  called  the  Blotter,  contains  the  memoranda  of  the  transac- 
tions of  a  business.  It  is  used  only  in  small  houses.  From  this  book  the  bookkeeper  journal- 
izes into  the  Journal. 

EXERCISE   5 

Rule  about  six  pages  for  a  Journal.  (See  form  on  page  20.)  Journalize  the  transactions 
noted  in  the  Daybook  on  pages  21-23,  in  accordance  with  the  following  directions. 

On  the  first  line  in  the  Journal  write  the  month  and  the  year.  In  the  center  of  the  line 
below  write  the  day  of  the  month.  On  tlie  next  line  make  the  first  entry.  Observe  closely  the 
form  on  page  20.  Write  titles  of  debited  accounts  at  the  left,  and  the  titles  of  credited  accounts 
at  the  right.     Leave  a  blank  line  after  each  entry,  and  insert  the  date  whenever  it  changes. 

Use  the  following  representative  accounts :  Cash,  Merchandise,  Sales,  Expense,  Bills 
Receivable,  Bills  Payable,  Furniture  and  Fixtures,  Horses  and  Wagons,  Interest  and  Discount, 
Commission,  Traveling  Expense,  Loss  and  Gain. 

Daybook 


f^^njjnJiJj.,  IQ— 

'cToT'                                        ^                                                       ^                '                                                                       ITEMS 

2 

cLau,  lyruMAtorva  tAjL  ^^McruArru^  AJlAcrUA/2JU> 

,^ 

Cx2jJv 

1500 

00 

A^ 

JbUvruJMAJL  cuTbcL  JuxluAjiS 

500 

00 

^ 

y<AAJL6  cunxJy  U/ajj^ortd 

/OOO 

00 

^ 

iThLhjcJi^ojruIjJiJb 

3000 

00 

boOO 

00 

22 


FUNDAMENTAL   PRINCIPLES   OF  BOOKKEEPING 
Daybook  —  Continued 


noAAn/iAJ.,  /Q- 


JOURNAL 
CHECK 


2 
IScrboaAZ  crl  'PoaAjOl  CaAfuiZ  Co. 
Otl  cucxyon/yrit 
lOOuijtJocLd  CUx^mJyTUJMv  CaApjit  @  $/.q5 

'PcuicL  AJunaJt  ol  InAjJxhjTu^  j^yh  ^<:unaAJMA/^ 

SoUJ.LU/croxi9^Co. 
250ui2JocLd  Qjj/rnA/rUiJMh  @$2U5 


ScrlcL  J.S.TbuuAoTL  9f  Co. 
200  LMoJocLb  Jru2JiajyrL 


50 


OUcIotA 


5 


200 


@      M5 


bo^ 
b^ 


l5//u      „      Q/x/rru/riAAA.   @$2.00 

IScnjjoAZ  a/  TKioxfui.  13Axy6. 

2CXXJUL6  7?ZuJi£orh.2gjO  (^<Lb.@33'^ 

7 

S  Cj  50.10  at  10  cLoyuJ),  ucnjJh  unnXsJuuJL 
cut,  b°/o,to  -IhjJ/i/rucJiy  ojyzxyuynt 

15 
TljuJUJMycL  a/ 3.S. ThjjAxrrh  9/-  Co. 
to  ^KiAj/ruzsb  cuzycxruunZ 


TUrbi  aZ  30  cbobUJ^  -i^yv 

'PcuicL  oThu  Turtju  4^cuLhyi  crl  /TbjxfuL  13a/>^. 
TUrbu  curruyiAynt 
JnJjJuLbZ  oTh  oJnnM. 

GoAM.  CL.13.  CcMuThb,  nniyU  PuuMJ/jrua  cuoji/nt 
CajJh-i^yb  cb nn^uutsucLgju  S-croA  cuo'uct  Juxfi£/nAJL6 


b/250 


22 


50 


120 

12 

302 


00 
00 
50 


3U 
UOO 


q^O 


/ 


50 
00 


10 
b3 


TOTAL 


/q5 


200 


00 


00 


b35 


00 


U3U 


q^O 


50 


/O 


q^O 


10 


U3U 


50 


qS-/ 


150 


V 


00 


JOURNALIZING 


23 


Daybook  —  Continued 


^nnjjn/iAL  IQ- 


JOURNAL 
CHECK 


n 

QiAocrLonnJjbcL  aZ  tAjL  Stux^U/rM /Tx2Jjxxrvci/ 
13a/nJt,  J.S.  Tlujjtorrh  9/-  Co6  Tvatz. 
Q^rrunuxnt  Ajujujmj£  i/rv  cxxaA. 
QcdyCcru/nZ 

CUxjLpJjbcL  roAAjJu  CaAfut  C<>d  cUvaJt 
dAMMJTh  Cm  mnjL^aZ  -luj^  dxujJ^' AIX2J1Z , 
to  -l/xxlxj/rvob  cu:xx>uynZ 

Scrlx£  J.S.  TbujAxTrL  9f  Co. 

Otl  axxxy-vonnX 

300  u<iAxLb  IJiIamX  CaAypJit  @  $/M5 

150       „         QJpxixxiy    ,  @      M5 

22 
l^cuucL  T^oaAjiA.  C/iAfUbt  Cad  cUuzM. 

djJJL  to-  cLoAf 

ScrlcL  nriJinyc/ucunaxiAJiJb  Aal  ooaJl 

CLd  pjiA.  cojJv  Axz/jiA  cJuucAa 

3/ 
CLJ3.  CxMLruib  cxjrn/rruAAooTb  otl  JixiIjl6 

cUVhUTU2^  tAjL  nnrumXA.  ojr- ^outvumAaj^ 

a.  13.  Catii/nXd  Juxicuvu  /c^  nna/rrvtA 
JAjl  pA/>pAAjit<yi/i' AtxzAzAu  j<fL  nnrwnhJJh 

nn^bcml/v  crj-  ixjuonjjxiAAJ,  cl6  fWb  Aid 

JLOCfUUYhLSb  S<TO-k 


397^7 


2 


33 


L/35 


00 


6750 


TOTAL 


UOO 


00 


/q5 


00 


502 


/q5 


375 


25 


200 


75 


50 


00 


00 


00 


00 


00 


/50 


00 


9^ 


75 


24 


FUNDAMENTAL  PRINCIPLES   OF  BOOKKEEPING 


Note.  —  Having  journalized  the  foregoing  transactions,  the  students  will  pass  their  books  to  the  teacher  for 
correction,  before  posting  as  required  in  the  next  exercise. 

QUESTIONS 

1.  Define  Journalizing.  2.  What  is  the  smallest  number  of  accounts  involved  in  a  transaction?  3.  Give  a 
transaction  in  which  is  involved  one  representative  and  one  personal  account.  4.  What  is  meant  by  an  original 
entry?  5.  Give  the  first  rule  for  journalizing.  6.  Illustrate  it.  7.  Give  the  second  rule  with  an  illustration. 
8.  Give  the  general  rule  and  two  illustrations.  9.  Form  a  transaction  in  which  two  representative  accounts 
should  be  debited  and  one  personal  account  credited.  10.  What  does  the  Journal  contain  ?  11.  Why  should  not 
the  word  " To "  be  used?  12.  Tell  when  the  word  "Sundries"  is  used  and  give  an  illustration.  13.  What  does 
the  Daybook  contain  ?    14.   What  book  is  written  up  from  the  Daybook? 


SECTION  IV.    POSTING 

45.  Posting  is  the  process  of  transferring  the  debits  and  credits,  including  their  dates  and 
amounts,  from  the  Journal  (or  other  Books  of  Original  Entry)  to  the  Ledger. 

In  posting  from  the  Journal,  the  amounts  in  the  debit  column  are  transferred  to  the 
debit  side  of  the  proper  Ledger  accounts,  and  the  amounts  in  the  credit  column  to  the  credit 
side  of  the  accounts,  as  each  item  is  transferred.  Write  the  letter  "  J  "  (for  Journal)  and  the 
page  number  in  the  Ledger,  and  in  the  Journal  write  the  number  of  the  Ledger  page. 

46.  The  Ledger  contains  the  accounts  of  a  business.     For  a  script  illustration  of  a  Ledger, 

see  pages  62-64.     The  following  illustration  contains  the  items  as  posted  from  the  Journal 

on  page  20  :  — 

Ledger 

M.    LOCKWOOD    (Stock)  1 

1901 


Jan.    2      Cash 


J     1      5000  00 


CASH 


1901 


Jan. 


M.  Lockwood 
Sales 
White  &  Co. 


5000 
75 
75 


00 
00 
00 


MERCHANDISE 


1901 


Jan. 


Harvey  &  Perry 


J      1      1250  00 


SALES 


1901 


Jan. 


White  &  Co. 
Cash  sales 


275 

75 


00 
00 


POSTING 


25 


Ledger  —  Continued 
BILLS   RECEIVABLE 


1901 

Jan-. 

7 

White  &  Co. 

J 

1 

200 

00 

6 

BILLS   PAYABLE 

1901 

Jan. 

10 

Harvey  &  Perry 

J 

1 

1000 

00 

HARVEY   &   PERRY 

7 

1901 

1901 

Jan. 

10 

Bills  Payable 

J 

1 

1000 

00 

Jan. 

3 

Mdse. 

J 

1 

1250 

00 

8 

WHITE    &   CO. 

1901 

1901 

Jan. 

4 

Sales 

J 

1 

275 

00 

Jan. 

7 
7 

Cash 

Bills  Receivable 

J 
J 

1 

i 

75 
200 

00 
00 

EXERCISE  6 

The  student  should  now  be  supplied  with  a  Ledger.  In  arranging  the  accounts,  enter  the 
stock  account  on  the  first  page  and  the  representative  accounts  following.  Allow  a  page  for 
each  of  these  accounts.  On  page  15  begin  to  enter  the  personal  accounts,  allowing  a  third  of 
a  page  for  each  account.  Post  the  Journal  of  Exercise  5  in  accordance  with  the  following 
guide  :  — 

Guide  for  Posting.  —  First  Entry  in  the  Journal  of  Exercise  5.  Turn  to  the  Ledger  and 
open  the  Stock  account  on  the  first  page.  On  the  first  line  of  the  page,  at  the  center,  write  the 
name  in  a  bold  hand.  (See  form  on  page  53.)  Next,  on  the  line  below,  on  the  credit  side, 
enter  the  year,  and  on  the  next  line  the  month  and  day,  Jan.  2.  (The  explanation  column, 
with  but  few  exceptions,  usually  remains  blank ;  it  is  little  used  in  business,  as  the  Books  of 
Original  Entry  contain  the  entries  with  explanations.)  Next,  at  the  left  of  the  page  column, 
just  outside,  write  the  letter  "  J,"  and  in  the  column  enter  the  Journal  page,  1,  from  which 
the  item  is  being  posted.  Next,  in  the  amount  column,  enter  the  amount,  6000.00.  Then  turn 
to  the  Journal  and  enter  the  Ledger  page,  1,  in  the  column  at  the  left  of  the  page,  to  indicate 
that  the  item  on  that  line  has  been  posted.     (See  form  on  page  20.) 

Open  an  account  with  Cash  on  page  2.  Write  the  word  Cash  on  the  first  line  near  the 
center.  On  the  next  line,  at  the  left-hand  side,  enter  the  year.  Below,  on  the  next  line, 
enter  the  date,  Jan.  2.     Next,  at  the  left  of  the  page  column,  write  the  letter  "  J,"  and  in  the 


26  FUNDAMENTAL   PRINCIPLES   OF  BOOKKEEPING 

column  enter  the  Journal  page,  1.  Next,  in  the  amount  column,  enter  the  amount,  1500.00. 
Then  turn  to  the  Journal  and  enter  the  Ledger  page,  2,  in  the  column  at  the  left  of  the  word 
Cash,  to  indicate  that  the  item  on  that  line  has  been  posted. 

Open  an  account  with  Furniture  and  Fixtures,  arranging  the  name  and  year  as  in  the 
account  just  mentioned.  Enter  on  the  debit  side  the  date,  Jan.  2 ;  next,  the  letter  "  J  "  and 
the  page,  1 ;  next,  the  amount,  500.00;  then  enter  the  Ledger  page  in  the  Journal. 

Open  an  account  with  Horses  and  Wagons.  On  the  line  below,  on  the  debit  side,  enter 
the  date,  Jan.  2  ;  next,  enter  the  Journal  page,  J  1  ;  next,  the  amount,  1000.00  ;  then  enter 
the  Ledger  page  in  the  Journal. 

Open  an  account  with  Merchandise.  Enter  on  the  debit  side  the  date,  Jan.  2 ;  next,  the 
Journal  page,  J  1 ;  next,  the  amount,  3000.00 ;  then  enter  the  Ledger  page  in  the  Journal. 

This  completes  the  posting  of  the  first  entry.  The  succeeding  entries  should  be  posted 
in  like  manner.  In  the  Bills  Receivable  and  Bills  Payable  accounts  it  is  customary  to  insert 
explanations  as  on  page  25. 

Trial  Balance 

47.  A  Trial  Balance  is  one  test  of  the  accuracy  of  the  Ledger.  While  it  does  not  prove 
that  each  amount  has  been  posted  to  the  correct  account,  it  does  prove  that  the  sum  of  all 
the  debits  equals  the  sum  of  all  the  credits  in  the  Ledger,  and  hence  that  probably  no  debit 
item  has  been  posted  from  the  Journal  or  other  Books  of  Original  Entry  without  posting  also 
the  corresponding  credit  item,  and  vice  versa. 

A  trial  balance  is  supposed  to  be  taken  at  the  end  of  every  month.  It  is  practically 
a  monthly  statement  of  the  condition  of  a  business,  and  it  is  also  the  basis  of  all  other 
statements. 

To  take  off  a  trial  balance  proceed  as  follows  :  — 

First.  —  Check  the  Journal  with  the  Ledger  for  the  purpose  of  discovering  errors  in  post- 
ing, using  a  period  (.)  as  a  check  mark  in  the  Ledger  and  the  Journal  (or  the  other  Books 
of  Original  Entry).  An  excellent  rule  is  to  check  the  work  daily,  thereby  leaving  little  to 
be  done  at  the  end  of  the  month,  when  there  is  ahvays  extra  work  on  hand. 

Second.  —  Add  each  side  of  each  Ledger  account  in  pencil.  Determine  the  balance  of 
each  account  and  (if  the  account  has  items  on  both  sides)  write  the  amount  in  pencil,  in  small 
figures,  on  the  greater  side,  in  the  explanation  column,  below  the  last  line  written.  (See  illus- 
tration, page  6.) 

Third.  — Write  on  Journal  paper,  or  in  the  Trial  Balance  Book,  the  Ledger  pages,  titles, 
and  balances,  placing  the  balances  in  the  columns  in  which  they  appear  in  the  Ledger.  (If 
there  is  no  cash  account  in  the  Ledger,  turn  to  the  Cash  Book  (page  47),  obtain  the  balance, 
and  enter  it  on  the  trial  balance  as  the  balance  of  Cash  account.) 

Fourth. — Add  each  column  of  the  trial  balance.  If  the  debit  and  credit  footings  equal 
each  other,  the  Ledger  balances ;  if  not,  errors  have  occurred. 

48.  Detection  of  Errors.  —  Errors  may  be  discovered  in  checking  the  postings,  in  adding 
the  items  in  the  Ledger,  in  determining  the  balances,  or  in  transferring  the  balances  to  the 
trial  balance. 

If  the  amount  is  divisible  by  2,  without  a  remainder,  the  quotient  may  be  an  amount 
posted  on  the  wrong  side  of  an  account,  or  a  balance  transferred  to  the  wrong  column  of 
the  trial  balance. 

EXERCISE   7 

Take  off  a  trial  balance  from  the  Ledger  in  Exercise  6,  according  to  the  foregoing 
method.  (Note  the  style  of  trial  balance  shown  in  the  specimen  at  the  top  of  the  next 
page.) 


POSTING 


27 


Trial  Balance 


B.  C  CIoaA  g^€o. 


LEDGER 
PAGE 


NAME   OF   ACCOUNT 


/ 

2 
3 
U 
5 
b 

7 

8- 

9 
/o 

// 

12 
/3 

m 

15 


B.  C.  Cla/Jt   (StxjvAJ 
m.a.CaJvUx(StxyxJt) 

Bern  Pcu^<zMi 

c.  Tn.J/uoist 

Zu  CL.  Sjujon^ixruA^C^/xJcuoriAjO 

B.  C.  CIoaA  (PjJhhyOTbcd) 

£.  13.  U/Jvu^Jot  Co. 
CL.13.  TZicU/L 


^-XljrrUAXWU' 


230525 


5/8- 


200 
100 
/OO 

523 
150 


75 


00 
00 
00 

50 
00 


1500 
1500 


250 


150 


3Sqn  50  38'qi  50  Um3  00 


00 
00 


50 
00 


00 


238-0 
8/8 


200 

300 

2U 

523 
75 


75 
75 


75 
75 


00 
00 
50 

50 
00 

50 
00 


1500 
1500 


1023 


150 


300 


um3 


00 
00 


00 


00 


00 


00 


QUESTIONS 

1.  Define  Posting.  2.  How  is  the  Journal  posted?  3.  What  is  written  in  the  account  to  signify  that  the 
entry  came  from  the  Journal?  4.  What  does  the  Ledger  contain?  5.  What  results  are  obtained  from  the 
Ledger  ?  6.  What  is  it  that  proves  the  equality  of  debits  and  credits  in  a  Ledger  ?  7.  Explain  the  method  of 
taking  off  a  trial  balance.     8.    Tn  what  ways  may  errors  be  discovered  when  the  trial  balance  does  not  balance? 


49.  To  Find  the  Present  Worth.  —  In  Exercise  8  a  partner  is  to  be  admitted,  hence  it  is 
necessary  to  find  Mr.  Student's  present  worth.  This  should  now  be  done  by  the  method 
shown  on  page  12.  The  inventories  are  :  Furniture  and  Fixtures,  i  500  ;  Horses  and  Wagons, 
$950;  Merchandise,  $3230.81.  After  entering  these  inventories,  be  sure  to  transfer  to  Loss 
and  Gain  account  the  balance  of  every  account  that  shows  a  loss  or  a  gain,  and  then  transfer 
the  balance  of  Loss  and  Gain  account  to  Student's  Stock  account  in  the  manner  described  on 
page  12. 

Ordinarily  the  next  step  would  be  to  balance  the  Stock  account ;  but  Mr.  Student  does 
not  need  to  draw  his  salary,  and  decides  to  add  this  amount  to  his  investment.  Therefore, 
transfer  the  balance  of  Mr.  Student's  personal  account  to  his  stock  account  by  entering  the 
balance  first  in  red  ink  on  the  debit  side  of  the  personal  account  and  then  in  black  ink  on  the 
credit  side  of  the  stock  account. 

Next,  enter  the  present  worth  in  red  ink  in  the  stock  account,  foot  and  rule  the  accounts 


28 


FUNDAMENTAL  PRINCIPLES    OF  BOOKKEEPING 


that  balance,  and  bring  down  the  inventories  and  the  present  worth,  in  black  ink,  to  the  opposite 
side  in  their  respective  accounts. 

Take  off  a  trial  balance. 

Render  a  statement  of  the  assets  and  liabilities  from  the  trial  balance  as  directed  in  Exer- 
cise 4. 

Note. If  the  ledger  has  been  closed  correctly  the  Loss  and  Gain  account  and  the  amount  of  present  worth 

will  be  as  follows  :  — 

Loss  AND  Gain 


Jan. 

31 
31 
31 
31 
31 
31 

Horses  and  Wagons, 

Expense, 

Interest  and  discount. 

Commission, 

Traveling  Expense, 

(Stock),         (red  ink) 

50 

625 

3 

25 

98 
200 

00 
00 
96 
00 
75 
00 

Jan. 

31 

Merchandise, 

1002 

71 

1002 

71 

1002 

71 

1 

Present  Worth,  $6350.00. 


QUESTIONS   FOR  DISCUSSION 

1.  A  farmer  buys  a  plow,  paying  for  it  with  wheat.  Discuss  possible  entries.  2.  A  merchant  buys  cer- 
tain goods,  and  up  to  the  time  of  closing  accounts,  sells  none.  Name  conditions  under  which  he  might  gain, 
lose,  or  neither  gain  or  lose,  on  the  invoice.  3.  What  are  the  essentials  in  recording  a  business  transaction? 
4.  What  is  the  significance  of  the  double  line  in  a  money  column  ?  Of  the  single  line  ?  5.  Rule  up  a  Ledger 
form  without  consulting  any  model.  6.  By  accident  a  money  value  in  an  account  is  blotted  out.  How  would 
you  discover  the  value?  7.  Is  it  possible  to  keep  a  clear  record  of  a  small  business,  using  only  the  Ledger? 
Give  reasons  in  full.  8.  Mention  suitable  names  for  the  accounts  which  should  indicate  the  earnings  of  each 
of  the  following  lines  of  business :  Magazine  Publisher,  Physician,  Lawyer,  Private  School,  Hotel. 

Note.  —  Continue  the  next  exercise  with  the  same  Journal  and  Ledger  as  those  used  in  Exercises  5  and  6. 

EXERCISE  8 

In  order  to  enlarge  the  business,  Mr.  Student  has  decided  to  admit  a  partner  on  February  1. 
The  style  of  the  firm  will  be  "  Student  &  Doolittle."  Gains  and  losses  are  to  be  shared  equally. 
Make  Journal  and  Ledger  entries  for  the  following:  — 


Daybook  Memoranda  of  Transactions 
February,  19 — 
1.    G.  L.  Doolittle  invests  in  the  business  of  Student  &  Doolittle,  this  day,  the  following 


assets 


Cash, 

White  &  Byron,  Balance, 
L.  S.  Parker,  Balance, 
Boyd  Furniture  Co.  Balance, 
Owen  Furniture  Co.  Balance, 
Bills  Receivable, 

L.  G.  Wood  &  Co.  note, 
G.  L.  Parks  &  Co.  note, 
Tuttle  Furniture  Co.  note. 


$3000.00 

500.00 

400.00 

550.00 

250.00 

300.00 

1000.00 

350.00 

1650.00 

16350.00 

POSTING  29 

2.    Sold  Boyd  Furniture  Co.,  City,  Terms  30  days,  125  yds.  Body  Brussels  @|!l.l5; 
50  yds.  Oilcloth  (|)40^. 

4.  Received  of  White  &  Byron  to  balance  account,  their  note  dated  February  1,  due  25 
days  after  date,  with  interest  at  (;)%,  payable  at  their  office,  $500. 

5.  Bought  of  Owen  Street  Co.,  New  York,  Terms  Cash,  500  yds.   Linoleum  @  64  )^ ; 
1000  yds.  Oilcloth®  25^. 

6.  Paid  A.  B.  Collins  to  apply  on  his  salary,  cash,  $75. 

7.  Received  Cash  for  Cash  Sales,  $  175. 
Paid  Cash  for  a  safe,  $60. 

Paid  H.  O.  Stone  &  Co.,  rent  for  February,  in  cash,  $150. 

8.  Sold  White  &  Byron,  City,  Terms  30  days,  50  yds.  Linoleum  @  92  J^;  27  yds.  Axmin- 
ster@$2.42. 

Paid  Owen  Street  Co.'s  invoice  of  Feb.  5,  in  cash,  $570. 

9.  Received  of  L.  S.  Parker  to  balance  account,  his  note,  dated  Feb.  5,  due  20  days  after 
date,  with  interest  at  6%,  $400. 

Received  Cash  for  Cash  Sales,  $195. 
11.    Paid  A.  B.  Collins  for  a  mileage  book  and  expenses,  $150. 
Paid  Pettibone  Wells  &  Co.,  for  office  supplies,  cash,  $12.75. 

13.  Bought  of  Wirts  Furniture  Co.,  New  York,  a  bill  of  goods  as  per  their  invoice  of 
Feb.  9,  amounting  to  $365. 

Mr.  Student  drew  cash  to  apply  on  his  salary,  $95. 

Sold  L.  S.  Parker,  City,  50  yds.  Wilton  @  $2.50;  75  yds.  Lining  @  9^;   2  Chairs 
No.  76  @  $7.50;  1  Rocker  No.  135  @  $10. 

14.  Mr.  G.  L.  Doolittle  drew  cash  to  apply  on  his  salary,  $125. 

15.  Accepted  draft  of  the  Wirts  Furniture  Co.,  in  favor  New  York  Bank,  dated  Feb.  9,  at  12 
days'  sight,  $365. 

16.  Sold  White  &  Byron,  Terms  60  days,  100  yds.  Linoleum  @  92^;  100  yds.  Lining 
@8^. 

18.  Paid  Cash  for  repairs  in  store,  $12.50. 
Paid  premium  on  insurance,  in  cash,  $75. 
Paid  Cash  for  stamps,  $5. 

19.  Gave  Mrs.  G.  L.  Doolittle  cash,  $25  (to  be  charged  to  Mr.  Doolittle). 
Received  Cash  for  Cash  Sales,  $185.50. 

20.  Received  Cash  in  payment  of  G.  L.  Park  &  Co.'s  note  due  to-day,  $1000. 

21.  Sold  A.  M.  Gates  4  Horses  and  2  Wagons  for  $390. 

Received  of  A.  M.  Gates  in  payment  of  his  account,  cash,  $90,  and  his  note,  dated 
Feb.  21,  due  in  30  days,  with  interest  at  7%,  $300. 

Received  Cash  of  Tuttle  Furniture  Co.  in  payment  of  their  note  due  to-day,  $  350. 
23.    Sold  Dewey  P'urniture  Co.,  City,  Terms  90  days,  2  Mahogany  Tables  No.  45  @  $15; 
3  Mahogany  Chairs  No.  768  @  $25. 

25.  Received  of  L.  S.  Parker  his  note,  dated  Feb.  25,  due  in  30  days,  with  interest  at  6%, 
as  a  renewal  for  his  note  due  to-day,  $400.  Charged  his  account  with  the  interest  due  on  the 
old  note,  20  days  at  6%  per  annum.     Returned  the  old  note. 

26.  Received  of  White  &  Byron  in  payment  of  their  note  due  to-day,  cash,  $502.08. 

27.  Paid  our  acceptance  of  the  15th  in  favor  of  New  York  Bank  due  to-day,  cash,  $365. 

28.  A.  B.  Collins's  total  expenses  for  February  as  per  his  expense  book  are  $95.50. 
Paid  the  Pay  Roll  for  February  in  cash,  $  275. 

Credit  the  partners  each  with  salary  at  the  rate  of  $200  a  month. 

A.  B.  Collins's  account  is  to  be  credited  with  salary  at  $  100  a  month. 

Draw  off  a  trial  balance. 


80 


FUNDAMENTAL   PRINCIPLES   OF  BOOKKEEPING 


50.  After  a  trial  balance  is  obtained,  a  condensed  statement  should  be  made  from  it 
and  submitted  to  the  proprietor.  The  divisions  into  which  a  trial  balance  is  divided  vary 
according  to  the  line  of  business ;  the  following  form,  however,  covers  a  broad  field :  — 

Little  &  White 
Statement  of  Trial  Balance  at  the  dose  of  the  second  fiscal  month,  April  30,  1903 


Cash 

In  bank, 

2,439.00 

In  drawer, 

50.53 

2,489.53 

Accounts  Receivable^  and  Bills 

Receivable 

Customers'  Accounts, 

3,004.34 

Traveling  Agents'  Expense  Accounts, 

175.00 

3,179.34 

Bills  Receivable, 

1,000.00 

Investments 

Real  Estate  and  Building, 

20,500.00 

Furniture  and  Fixtures, 

1,500.00 

Horses  and  Wagons, 

1,570.00 

23,570.00 

Cost  of  Stock 

Merchandise, 

20,025.00 

General  Expenses 

Insurance, 

250.00 

Pay  Roll, 

1,500.00 

Expense, 

381.15 

Repairs  on  Building, 

200.00 

Salary,                                                                   * 

1,725.00 

4,056.15 

Earnings 

Merchandise  Sales, 

29,623.72 

Commissions, 

350.00 

29,973.72 

Accounts  PayahW^  and  Bills 

Payable 

Purchase  Accounts, 

5,181.30 

Salary  Accounts, 

515.00 

5,696.30 

Bills  Payable, 

4,000.00 

Capital  and  Surplus' 

H.  B.  White  Stock, 

7,162.50 

C.  M.  Little  Stock, 

7,162.50 

Profit  and  Loss  —  Undivided  Profits, 

325.00 

54,320.02    54,320.02 


EXERCISE  9 
Prepare  the  February  statement  of  Student  &  Doolittle. 

EXERCISE   10 

Prepare  a  monthly  statement  from  the  following  trial  balance :  — 

1  Accounts  receivable  are  outstanding  debtors'  accounts,  and  accounts  payable  are  unpaid  creditors'  accounts.. 

2  If  the  statement  were  that  of  a  corporation  instead  of  a  partnership,  the  items  under  "Capital  and  Surplus'* 
might  be  "Capital  Stock,"  "Surplus,"  "Treasury  Stock,"  and  "Profit  and  Loss." 


POSTING 


31 


The  Lake  Shore  Hotel, 
Trial  Balance,  February  1,  1902 


1. 

M.  A.  Shore,  Stock, 

2. 

M,  A.  Shore,  Personal, 

3. 

Furniture,  Carpets,  and  Fixtures, 

4. 

Paintings, 

5. 

Linen, 

6. 

Office  Furniture  and  Fixtures, 

7. 

Merchandise. 

8. 

China,  Silver,  Crystal,  etc., 

9. 

Chicago  City  Railway  Stock, 

10. 

Bills  Receivable, 

11. 

Bills  Payable, 

12. 

Board, 

13. 

Laundry, 

14. 

Pay  Roll, 

15. 

Office  Salary, 

16. 

Rent, 

17. 

Salary, 

18. 

Sub-Rent, 

19. 

Insurance, 

20. 

Furniture  Repair, 

21. 

Improvements, 

22. 

General  Expense, 

23. 

Coal, 

24. 

Gas, 

25. 

Collection  Expense, 

26. 

Charity, 

27. 

E.  A.  Sweet, 

28. 

Mrs.  M.  B.  Savage, 

29. 

Colorado  Mining  Stock, 

30. 

John  V.  Book, 

31. 

W.  B.  Chair,  Jr., 

32. 

B.  V.  Black, 

33. 

J.  H.  Chapman  &  Co., 

34. 

E.  McDonnell, 

35. 

Chicago  Coal  Co., 

36. 

L.  G.  Black  &  Co., 

37. 

Munger  Laundry  Co., 

38. 

Reed  Furniture  Co., 

39. 

Brown  Bros.  Poultry  Co., 

40. 

Smith,  Christy  &  Co., 

41. 

William  Woodman, 

42. 

Sprague,  Warner  &  Co., 

43. 

Marshall  Field  &  Co., 

44. 

Cash bank  overdrawn,^ 

37.80 

25,650.00 

4,570.00 

2,765.25 

750.00 

5,923.64 

3,768.00 

5,000.00 

575.00 


1,350.00 
4,750.80 
600.00 
3,000.00 
1,200.00 

300.00 
73.50 

900.00 
2,093.84 

863.75 

675.80 
93.50 

155.45 

78.50 
1,500.00 
47.85 
138.25 
13.85 
51.00 
59.00 


35,167.64 


1,625.00 
27,860.00 


600.00 


125.00 


57.50 
137.50 
237.50 
473.54 

78.60 

9.75 

100.25 

373.50 

164.50 

74.50 


66,984.78  66,984.78 


1  This  means  that  the  Hotel  has  drawn  on  the  bank  for  more  money  than  it  has  on  deposit.  It  therefore  owes  the 
bank  the  amount  of  overdraft  or  deficiency.  Responsible  depositors  are  frequently  permitted  to  overdraw  their  deposits 
temporarily,  for  slight  amounts. 


32  FUNDAMENTAL  PRINCIPLES   OF  BOOKKEEPING 

SECTION  V.    JOURNALIZING  NOTES  AND  DRAFTS 

To  THE  Teacher.  —  If  the  students  find  difficulty  in  journalizing  notes  and  drafts,  either  now  or  later, 
the  work  on  pages  32-38  may  be  taken,  or  as  much  of  it  as  is  necessary.     (See  also  pages  88-93.) 

51.  Journalizing  Notes  and  Drafts.  — For  the  general  rule  for  journalizing  notes  and  drafts, 
see  rule  3,  page  19 ;  also  Bills  Receivable  and  Bills  Payable,  pages  7  and  8. 

Note.  —  Teachers  should  require  students  to  show  how  the  special  rules  may  be  deduced  from  the  general 
rules  (on  page  19)  and  to  explain  the  special  application  of  the  rules  to  the  cases  and  transactions  considered  in 
the  following  pages. 

Journalizing  Notes 

The  Entries  for  the  Payee  are :  — 

1.  When  a  note  is  received  :  — 

Bills  Receivable 

Maker  or  Indorser 

Ex.  —  Received  of  Mills  &  Wells  their  note,  dated  Jan.  o,  due  in  30  days,  with  interest  at  6  %,  to  balance 
account,  |2000. 

Received  of  E.  E.  Bushnell  &  Son,  to  apply  on  account,  a  note  to  their  order  signed  by  M.  B.  Bright,  dated 
Jan.  10,  payable  in  30  days,  f  200. 

Note.  —  The  note  is  indorsed  by  E.  E.  Bushnell  &  Son,  who  thus  substitute  for  themselves,  as  payees,  the 
firm  to  which  they  give  the  note.     (See  page  108.) 

Received  of  J.  M.  Lewis  in  settlement  of  his  account,  his  note,  dated  Jan.  26,  payable  in  3  months,  $500. 

2.  When  cash  is  received  in  payment  of  a  non-interest-bearing  note  :  — 

Cash 

Bills  Receivable 

Ex.  —  Received  of  Collins  Machine  Co.  their  check  in  payment  of  their  note,  12000. 

3.  When  a  non-interest-bearing  note  is  discounted  :  — 

Sundries  Bills  Receivable 

Cash 

Discount 

Ex.  —  The  bank  discounted  the  |500  note  of  J.  M.  Lewis,  paying  us  the  proceeds,  f  492.50. 

4.  When  an  interest-bearing  note  is  discounted  :  — 

Sundries  Sundries 

Cash 

Discount 

Bills  Receivable 
Interest 

Ex.  —  Sold  J.  J.  Baldwin,  at  discount  of  8  %  per  annum,  M.  A.  Winter's  note  for  $300,  dated  to-day,  Jan.  15, 
payable  in  4  months,  with  interest  at  7%  per  annum.     (Find  the  interest  and  the  discount.) 

5.  When   a   non-interest-bearing    note    is    transferred    (by    indorsement)    to   apply   on 

account :  — 

New  Payee 

Bills  Receivable 

Ex. — Indorsed  to  Harvey  Machine  Co.,  to  apply  on  account,  the  note  of  E.  E.  Bushnell  &  Son,  $1000. 


JOURNALIZING  NOTES  AND  DRAFTS  33 

6.   When  one  receives  a  check  and  a  new  note  as  part  renewal  for  a  note  becoming  due  :  — 

(a)  For  the  check. 

Cash  Sundries 

Maker 

Interest  (if  any) 
(6)  For  the  new  note. 

Bills  Receivable 

Maker 
(<?)  For  the  old  note. 
Maker 

Bills  Receivable 

Ex.  — Received  of  Mills  &  Wells  their  check  for  $510   and  their   note   for    $1500,   dated    Feb.    4,   to 
balance  their  $2000  note  due  to-day. 

The  Entries  for  the  Maker  are  :  — 

1.  When  a  note  is  given  :  — 

Payee 

Bills  Payable 

Ex.  —  Gave  E.  Jl  Cooper  to  apply  on  account,  our  note,  dated  March  25,  due  in  30  days,  payable  at  the  Nevr 
York  Nat.  Bank,  $  575. 

Gave  C.  C.  Simpson  &  Co.  our  note,  dated  May  25,  payable  in  2  months,  with  interest  at  6%  per  annum,  $225. 
Gave  Warner  Mfg.  Co.  our  note  for  $  350,  dated  Mai'ch  1,  payable  on  April  25. 

2.  When  an  interest-bearing  note  is  paid  :  — 

Sundries  Cash 

Bills  Payable 

Interest 

Ex. — Mailed  C.  C.  Simpson  &  Co.  our  check  in  payment  of  our  $225  note  due  to-day,  $227.25. 

3.  When  part  of  a  note  is  renewed,  and  the  balance  paid  in  cash :  — 

(a)  For  the  check. 
Payee 

Cash. 
(6)  For  the  new  note. 
Payee 

Bills  Payable, 
(c)   For  the  old  note. 
Bills  Payable 

Payee. 

Ex.  —  Inclosed  in  a  letter  to  E.  E.  Cooper,  a  check  for  $200,  and  a  new  note  for  $375,  dated  April  25,  to 
balance  our  note  due  on  that  day. 

4.  When  the  full  amount  of  a  note  is  renewed  :  — 

(a)  For  the  new  note. 
Payee 

Bills  Payable. 
(6)  For  the  old  note. 
Bills  Payable 

Payee. 

Ex.  —  Gave  the  Warner  Mfg.  Co.  our  note,  dated  April  25,  due  in  60  days,  wifh  interest  at  7  %  per  annum,  for 
our  note  due  to-day,  $  350. 


34  FUNDAMENTAL   PRINCIPLES   OF  BOOKKEEPING 

6.    When  a  note  is  discounted  at  the  bank :  — 

Sundries  Bills  Payable 

Cash 

Discount 

Ex.  —  Secured  a  loan  at  the  bank  on  our  note,  dated  May  15,  payable  in  30  days,  $200.  Discount  f  1 ;  Pro- 
ceeds, $199. 

6.    When  a  note  at  the  bank  is  renewed :  — 

(a)  For  the  old  note. 
Bills  Payable 

Cash 
(6)  For  the  new  note. 

Sundries  Bills  Payable 

Cash 

Discount 

Ex.  —  Gave  the  bank  our  check  for  $200  and  our  note  for  $200,  dated  June  14,  payable  in  60  days,  as  a 
renewal  for  our  note  due  to-day.     Discount,  $  2 ;  Proceeds,  $  198. 

XoTE.  —  The  maker  really  pays  the  old  note,  and  at  the  same  time  has  the  new  one  discounted.  The  pro- 
ceeds are  debited  to  Cash,  since  they  are  available  as  money,  the  same  as  any  deposits  in  the  bank. 

Journalizing  Drafts 

The  Entries  for  the  Drawer  are  ;  — 

1.  When  a  sight  draft  is  collected  by  a  bank  :  — 

Sundries  Drawee 

Cash 

Exchange 

Ex.  —  Drew  a  sight  draft  on  Cooper  &  Dow,  St.  Louis,  Mo.,  to  the  order  of  the  St.  Louis  Nat.  Bank,  for 
$68.75.     The  bank  collected  the  draft  and  returned  to  us  the  proceeds,  $68.50. 

2.  When  a  sight  draft  is  deposited  in  the  bank  :  — 

Sundries  Drawee 

Cash 

Exchange  (if  any) 

Ex. — Drew  a  sight  draft  on  E.  O.  M.  Kent  &  Co.,  Kansas  City,  Mo.,  to  the  order  of  Students'  Nat.  Bank, 
Chicago,  for  $  150.     Deposited  it  in  the  bank,  receiving  credit  for  the  proceeds,  $  149.50. 

Note.  —  As  will  be  explained  later,  the  firm's  bank  account  is  considered  as  part  of  its  cash  on  hand. 

3.  When  a  sight  draft  is  remitted  to  the  payee  to  apply  on  account :  — 

Payee 

Drawee 

Ex.  —  Drew  a  sight  draft  on  George  Southwick,  Davenport,  la.,  to  the  order  of  A.  B.  Rider  &  Son,  and 
remitted  to  them  to  balance  account,  $  75.90. 

4.  When  a  time  draft  is  collected  by  the  bank  :  — 

Sundries  Drawee 

Cash 

Exchange 

Ex.  —  Drew  a  draft  at  15  days'  sight,  on  Coe  &  Walker,  Milwaukee,  favor  of  Students'  Nat.  Bank,  Chicago,  for 
$  35.50.     The  bank  collected  draft  at  maturity  and  gave  us  credit  for  the  proceeds,  $  35.25. 


JOURNALIZING   NOTES   AND   DRAFTS  36 

5.  When  a  time  draft  is  discounted  at  the  bank  :  — 

Sundries  Drawee 

Cash 

Discount 

Ex.  —  Drew  a  draft  at  10  days  from  date  on  M.  D.  Roberts,  Springfield,  111,,  to  the  order  of  Students' 
Nat.  Bank,  for  $500.     Discounted  it  at  our  bank,  receiving  credit  for  the  proceeds,  )^ 499.17. 

6.  When  a  time  draft,  in  favor  of  the  drawer  (page  90),  is  accepted  by  the  drawee  :  — 

Bills  Receivable 

Drawee 

Ex.  —  Drew  a  draft  on  E.  E.  West,  Grand  Rapids,  Mich.,  favor  of  ourselves;  which  the  drawee  accepted 
this  day  while  in  our  office. 

The  Entries  for  the  Drawee  are :  — 

1.  When  a  sight  draft  is  paid  :  — 

Drawer 

Cash 

Ex.  — Paid  the  Watson  Mfg.  Co.'s  sight  draft  onus, dated  Jan.  21,  to  the  order  of  First  Nat.  Bank,  for  $75. 

2.  When  a  time  draft  is  accepted  :  — 

Drawer 

Bills  Payable 

Ex.  —  Accepted  on  Jan.  30,  payable  at  Students'  Nat.  Bank,  M.  C.  Goodwin  &  Co.'s  draft  to  the  order  of  the 
Chemical  Nat.  Bank,  New  York,  dated  Jan.  28,  at  20  days'  sight,  $325. 

3.  When  a  time  draft,  having  been  accepted,  is  paid  at  maturity  :  — 

Bills  Payable 

Cash 

Ex.  —  Paid  by  check  our  acceptance  of  Jan.  30,  favor  of  Chemical  Nat.  Bank  of  New  York,  for  $  325. 

,    4.    When  a  time  draft  is  discounted  —  paid  immediately  on  presentation  or  before  day  of 

maturity :  — 

Drawer  Sundries 

Cash 
Discount 

Ex.  —  Prepaid  Moss,  Brown  &  Co.'s  draft  on  us  for  $  250,  less  discount  20  days  at  6  %.     (Find  the  discount.) 

The  Entries  for  the  Payee  are  :  — 

1 .  When  a  sight  draft  is  paid  :  — 

Cash 

Drawer 

Ex.  — Received  of  the  Perkins  Furniture  Co.,  a  check  in  payment  of  Lee  &  May's  sight  draft  for  $95.50. 

2.  When  a  time  draft  is  accepted  on  presentation :  — 

Bills  Receivable 

Drawer 

Ex.  —  M.  D.  Roberts  accepted  W.  W.  Foster  &  Co.'s  draft,  drawn  on  him  at  30  days'  sight,  $175. 


36 


FUNDAMENTAL  PRINCIPLES   OF  BOOKKEEPING 


3.  When  an  accepted  draft  is  paid  at  maturity  :  — 

Cash 

Bills  Receivable 

Ex.  —  Received  of  M.  D.  Roberts  a  check  in  payment  of  his  acceptance  of  W.  W.  Foster  &  Co.'s  draft  due 
to-day,  %  175. 

4.  When  a  time  draft  is  discounted  for  the  drawer :  — 

Bills  Receivable  Sundries 

Cash 
Discount 

Ex.  —  Discounted  for  the  Wilson  Mfg.  Co.  a  45  days'  sight  draft  for  ^  278,  drawn  on  the  Des  Moines  Machine 
Co. ;  giving  our  check  for  $275.50; 

EXERCISE  11 

The  following  is  a  statement  of  the  debtors'  and  creditors'  accounts  of  Burry  &  Wood  at 
commencement  of  business,  July  1,  19 — . 


Accounts  Receivable  (^Debtors'  Accounts^ 

J.  D.  Hannibal,  Milwaukee,  Wis., 

C.  M.  Mitchell  &  Co.,  Springfield,  111., 

Ciu'tiss  &  Drake,  Springfield,  111., 

Burns  Mfg.  Co.,  Milwaukee,  Wis., 

Louis  &  White,  Kock  Island,  111., 

Hannah  &  Morgan  Co.,  Chicago,  111., 

B.  C.  Scott  &  Co.,  Aurora,  111., 

J.  E.  Cole  &  Co.,  Kansas  City,  Mo., 


$375.00 
1500.75 

500.00 

250.00 

900.00 

875.25 
1350.00 

535.25     6286.25 


Accounts  Pt 

lyable  (^Creditors''  Accounts^ 

J.  D.  Mann, 

New  York, 

$  290.00 

M.  C.  Murray, 

New  York, 

765.00 

Gordon,  Little  &  Co., 

Boston, 

700.00 

Carter  &  White, 

Chicago, 

250.00 

Meade  Mfg.  Co., 

Chicago, 

500.00 

W.  W.  Poster  &  Co., 

Boston, 

900.00 

Mason  &  Walker, 

Cincinnati, 

750.00 

Grant  &  Morgan, 

Chicago, 

1575.00 

5730.00 

Open  accounts,  on  Ledger  paper,  with  each  of  the  foregoing  persons  and  firms,  debiting 
the  Accounts  Receivable  (debtors)  and  crediting  the  Accounts  Payable  (creditors)  with  their 
respective  amounts  ;  use  for  explanation  the  word  "  Balance." 

Then  journalize  the  following  transactions  on  Journal  paper,  and  afterward  post  the  debits 
and  credits  to  their  respective  accounts.  Give  Bills  Receivable,  Bills  Payable,  and  Cash  each  a 
page,  and  all  other  accounts  a  third  of  a  page. 

Memoranda  of  Transactions  Relating  to  Notes 
July 
1.    The  following  notes  have  been  received  to-day  payable  to  our  order :  — 


J.  D.  Hannibal, 
Curtiss  &  Drake, 
Burns  Mfg.   Co., 
Louis  &  White, 

B.  C.  Scott  &  Co., 

C.  M.  Mitchell  &  Co., 


note  dated  June    3,  for  30  days,  at  6^  interest,  $375. 
"     14,    "    60      "  500. 


2  mo.,     at  Qf 


"     15,  ' 

July    1,  "  15  days, 

June    5,  "  30      " 

"       3,  "      1  month. 


200. 

500. 
1300. 
1350. 


3, 

30      " 

(( 

6/o, 

200. 

5, 

45      " 

a 

1% 

250. 

5, 

30      " 

365. 

10, 

30      " 

u 

Q% 

250. 

20, 

25      " 

500. 

JOURNALIZING   NOTES   AND   DRAFTS  37 

2.  Our  bank  (Students'  Nat.  Bank)  discounted  Burns  Mfg.  Co.'s  note,  charging  6^  dis- 
count for  44  days.     Discount,  11.48;    Proceeds,  8200.52. 

3.  Received  cash  of  J.  D.  Hannibal,  in  payment  of  his  interest-bearing  note,  due  to-day, 
1376.88. 

Discounted  at  the  bank,  at  6^,  note  of  Curtiss  &  Drake,  $500.     Discount,  $3.42; 
Proceeds,  -$496.58. 

Received  a  check  of  C.  M.  Mitchell  &  Co.  in  payment  of  their  note  due  to-day,  $1350. 
5.    Indorsed  to  the  Meade  Mfg.  Co.,  to  balance  account,  Louis  &  Wliite's  note,  $500, 
dated  July  1,  at  15  days. 

Received  a  check  and  a  3  months'  note  of  B.  C.  Scott  &  Co.  in  settlement  of  their 
note   due    to-day.      The    check    is  for   $1000,  and   the   note   for   $300,  dated   July    5,  with 
interest  at  6^  per  annum.     Returned  to  them  the  old  note. 
12.    Gave  notes  to  the  following  firms :  — 

Grant  &  Morgan,  note  dated  July  12,  for  60  days,  int.  6^,  $1000. 

J.  D.  Mann,  " 

Gordon,  Little  &  Co.,       " 

M.   C.  Murray,  " 

Carter  &  White,  " 

Mason  &  Walker,  " 

15.  Received  of  Louis  &  White,  their  note,  dated  July  16,  for  45  days,  with  interest 
at  6^  per  annum,  for  $500,  as  a  renewal  for  their  note  due  to-morrow.  The  old  note  we 
can  not  return,  having  sold  it  to  the  Meade  Mfg.  Co.  on  July  5 ;  but  to  accommodate 
Louis  &  White  we  keep  their  new  note  and  send  them  a  check  with  which  to  pay  the  old  one. 

24.  C.  B.  Warner  &  Co.  gave  us,  as  an  accommodation,  their  note,  dated  July  24, 
payable  in  one  month,  $1000. 

Discounted  at  the  bank  C.  B.  Warner  &  Co."s  note.     Discount,  $5;  Proceeds,  $995. 

26.  Discounted  at  the  bank  (Students'  Nat.  Bank)  our  note,  dated  July  26,  payable  in 
22  days,  $1000.     Discount,  $3.67;    Proceeds,  $996.33. 

August 

2.  Paid  our  note  in  favor  of  J.   D.  Mann  &  Co.  by  check,  $201. 

3.  Mailed  M.   C.  Murray  a  check  in  payment  of  our  note  due  to-morrow,  $365. 

9.    Gave  Carter  &  White  a  check  for  $51.25,  and  a  new  note  for  $200,  dated  Aug.  10, 
payable  in  30  days,  to  meet  our  note  due  to-day.     Received  the  old  note. 

12.  Gave  W.  W.  Foster  &  Co.  our  two  notes,  $450  each,  dated  Aug.  12,  with  interest 
at  6^  per  annum,  payable  in  10  and  20  days,  to  balance  account,  $900. 

14,  Gave  Mason  &  Walker  our  note  for  $500,  dated  Aug.  14,  for  60  days,  in  settle- 
ment of  our  note  due  to-day. 

17.  Renewed  at  the  bank  part  of  our  note  due  to-day.  Gave  check  for  $1000,  and 
new  note  payable  in  10  days,  $500,  Discount,  83^;  Proceeds,  $499.17,  (See  transaction 
of  July  26  above,  and  also  rule  6  on  page  34,) 

Mailed  Gordon,  Little  &  Co,  a  check  for  interest  due  on  note,  $2,19,  and  a  new  note, 
dated  Aug,   19,  for  60  days,  as  renewal  for  note  due  then,  $250. 

22,  Gave  W,  W.  Foster  &  Co.  our  check  in  payment  of  our  note  due  to-day,  $450.75. 

23.  Gave  C.  B.  Warner  &  Co.  a  check  to  "take  up"  their  note  due  to-morrow,  $1000. 

27.  Gave  the  bank  our  check  in  payment  of  our  note  due  to-day,  $500. 

30.    Received  of  Louis  &  White  their  check  in  payment  of  their  note  due  to-day,  $503,75. 

Note.  —  The  student  should  post  the  foregoing  entries  before  journalizing  the  next  month's  transactions. 
He  will  thus  be  prepared  to  ascertain  the  balance  of  any  account  desired. 


38  FUNDAMENTAL   PRINCIPLES   OF  BOOKKEEPING 

Memoranda  of  Transactions  Relating  to  Drafts 

September 

4.  Drew  a  draft  at  one  day's  sight  on  J.  E.  Cole  &  Co.,  in  favor  of  the  Kansas  City  Bank, 
for  $  200. 

Note.  —  Write  to  the  cashier  of  that  bank  inclosing  the  draft  for  collection. 

Accepted  J.  D.  Mann's  10  days'  sight  draft  on  us,  favor  of  the  Chemical  Nat.  Bank, 
New  York,  for  f  90. 

6.  Received  of  Hannah,  Morgan  &  Co.,  to  apply  on  account,  their  draft  in  our  favor  for 
$500  at  10  days'  sight,  on  Wilson  Mfg.  Co.,  Chicago.  The  draft  was  this  day  accepted  by  the 
drawee. 

7.  Drew  a  sight  draft  on  the  Burns  Mfg.  Co.,  in  favor  of  our  bank  (Students'  Nat.  Bank), 
for  $  50,  and  had  it  deposited  to  our  credit.     The  exchange  was  25  cents. 

9.  Received  of  the  Kansas  City  Bank  $199.50  in  payment  of  the  draft  we  drew  on 
J.  E.  Cole  &  Co. 

Drew  a  sight  draft  on  J.  E.  Cole  &  Co.,  Kansas  City,  in  favor  of  M.  C.  Murray,  and 
sent  it  to  M.  C.  Murray  to  apply  on  account,  $300. 

11.  Drew  a  draft  at  45  days'  sight  on  B.  C.  Scott  &  Co.,  Aurora,  111.,  to  the  order  of  our  bank, 
for  $50.     The  bank  allowed  us  to  deposit  it,  crediting  our  account  with  the  proceeds,  $49.62. 

14.  Paid  our  acceptance  of  Sept.  4,  in  favor  of  the  Chemical  Nat.  Bank,  by  check  on  the 
Students'  Nat.  Bank,  $  90. 

16.  Received  of  the  Wilson  Mfg.  Co.  their  check  in  payment  of  their 'acceptance  of 
Sept.  6,  $500. 

Drew  a  draft  on  Louis  &  White,  Rock  Island,  111.,  to  the  order  of  our  bank,  at  10 
days  from  date,  to  balance  account,  $  400.     Gave  the  draft  to  the  bank  to  collect. 
Note.  —  Make  no  entry  till  the  draft  is  paid. 

18.  Paid  M,  C.  Murray's  sight  draft  on  us,  dated  Sept.  16,  in  favor  of  the  Chicago  Nat. 
Bank,  $  100. 

20.  Paid  on  presentation.  Mason  &  Walker's  draft  on  us,  favor  of  the  Commercial  Nat. 
Bank,  Chicago,  dated  Sept.  18,  at  30  days'  sight,  for  $  250.  Gave  the  bank  a  check  for  the 
proceeds,  $248.75. 

23.  Discounted  M.  D.  Walker's  draft  drawn  on  G.  B.  Perkins  &  Co.,  accepted  Sept.  23, 
at  60  days'  sight,  $  75.     Proceeds,  $  74.25. 

26.  Collected  Hannah,  Morgan  &  Co.'s  sight  draft,  in  our  favor,  on  the  Gordon  Machine 
Co.,  to  apply  on  account,  $75.25. 

26.  Received  credit  in  our  deposit  book  for  the  proceeds  of  our  draft,  collected  from  Louis 
&  White,  $399. 

28.  Drew  a  draft  on  C.  M.  Mitchell  Co.  in  favor  of  ourselves,  dated  Sept.  28,  at  30  days' 
sight,  for  $150.75.  Mr.  C.  M.  Mitchell  accepted  it  immediately,  and  we  later  indorsed  it  to 
our  bank  for  collection. 

Note.  —  If  the  entries  in  Exercise  11  are  properly  made  and  posted,  the  sum  of  the  debit  balances  will  be 
$  556.25  more  than  the  sum  of  the  credit  balances.  The  student  should  explain  why  the  two  sums  are  not  equal. 
(See  page  36.) 


PART   II.     BUSINESS   RECORD 

SECTION  I.    BOOKS  FOR  BOOKKEEPING 

Classification  of  Books 

52.  The  books  used  in  bookkeeping  are  divided  into  three  classes,  —  Auxiliary  Books, 
,  Books  of  Original  Entry,  and  the  Ledger.     The  books  mentioned  below  form  the  set  required 

by  most  business  houses ;  also,  they  form  the  basis  of  the  more  complicated  sets. 

53.  The  Auxiliary  Books  in  common  use  are  :  (1)  Order  Book  (Blanks),  (2)  Order  Book 
(Receiving),  (3)  Receiving  Book,  (4)  Shipping  Book,  (5)  Petty  Cash  Book,  (6)  Invoice 
Book,  (7)  Bill  Book,  (8)  Deposit  (Bank)  Book,  (9)  Check  Book,  and  (10)  Pay  Roll  Book. 
Properly  used,  these  books  prepare  the  work  for  the  Books  of  Original  Entry  and  render  the 
Daybook  unnecessary. 

54.  The  Books  of  Original  Entry  are  :  (1)  Sales  Book,  (2)  Cash  Book,  and  (3)  Journal. 
These  show  every  transaction  of  a  business  journalized  into  debit  and  credit  entries,  ready  for 
posting. 

These  and  the  auxiliary  books  are  considered  the  most  important  in  cases  of  litigation,  so 
that  erasures  should  be  avoided.  If  necessary  to  make  a  change,  it  is  better  to  draw  a  line 
through  the  error  and  write  the  correction  above. 

55.  The  Books  of  Entry  are  :    the  Books  of  Original  Entry  and  the  Ledger.  • 

Auxiliary  Books  Described 

56.  The  Order  Book  consists  of  blanks  to  be  filled  out  when  purchases  are  to  be  made. 
When  invoices  are  received  by  the  firm  the  items  are  checked  according  to  the  record  on 

the  stub  of  this  book,  in  order  to  detect  possible  errors. 


Order  Book 


ORDER 

JTo.  /. 

From  John  Stewart 

Date,  ^CLTbWd'bJ^ ,190/ . 

J^o.  /.                           Chicago,  Jd'vmciiy  2;  190  f. 

To  m.  a.  ii>(iLt, 

m.  d.  W-alt, 

7?ltnm.ta//aotia ,  THwin. 

ITllTi'j'vtdfiotl^,  THLmTi. 

Ship  via 

Please  ship  to  Vtb 

26  (yUya..  Mo^h 

25  UU.  Mcmh 

fOO  6-ooce.^  Jv-ohj  ^oa/fh 

fOO  6-aoa.^  Jvovy  cfaafi 

And  charge  to  account  of 

Give  Order  Xu«>ier                   johw  ifUwOAjt. 

on  Invoice.                                                      Per  €.  ^. 

39 


40 


BUSINESS  RECORD 


57.  The  Order  Book  (Receiving)  is  a  blank  book  in  which  are  recorded  the  orders  received 
from  customers,  traveling  men,  etc. 

The  orders  are  copied  from  this  book  on  Order  Blanks  and  given  to  the  shipping  clerk 
for  filling  and  shipment.     P2ach  order  is  numbered  as  it  is  entered  in  the  book. 


Order 


Order  Book 
JVo.  /Of. 


Their  Order  J^o.  360.  '  Bate  of  Order,  ^d'TOUdhy  2,  1900. 

Ship  via  the  (g.  ??l  ^  ^t.  c^.  /?.  /?.  Xame,  Sba\.(ft  S.  THcyThl^at  V  &a. 

Terms,  30  cLdJ^.  Salesman,  S.  h.  ^.  Town,  iTliLwCiiiA^^,  ZO^l^. 

10  M^.  dp^t^ 
16  (ylyt^.  oft.  Lau.l'Q^  Stavi'b 
6  ^^%&^  f^dvaui'yi^ 


Order 


Jfo.  102. 


Their  Order  J^o. 
Ship  via  the 
Terms, 


Salesman, 


Date  of  Order, 
J^Tame, 

Town, 


19 


58.    The  Receiving  Book  contains  a  record  of  the  goods  received,  with  the  names  and 
addresses  of  the  shippers. 

From  this  book  the  invoices  received  are  checked  and  O.K.'d  as  to  the  quantity. 


Receiving  Book 
Chicago,  January,  1901 


50 
10 

25 
100 

o 

George  Beecher  &  Son, 

City, 
bbls.  Apples, 
bbls.  Flour. 

7 

M.  A.  Wait, 

Minneapolis,  Minn, 
bbls.  Flour, 
boxes  Ivory  Soap. 

BOOKS  FOR   BOOKKEEPING 


41 


59.    The  Shipping  Book  contains  a  record  of  the  goods  shipped  and  delivered,  giving  the 
names  and  addresses  of  the  customers,  and  telling  how  the  goods  were  shipped,  etc. 

Shipping  3ook 
Chicago,  January,  1901 


10 

15 

5 


George  F.  Monroe  &  Co., 

Milwaukee,  Wis. 
Oar  Order  No.  101. 

Their  Order  No.  350.     Via  the  C.  M.  &  St.  P.  K.  R. 
bbls.  Apples, 
bbls.  St.  Louis  Flour, 
boxes  Raisins. 


60.  The  Petty  Cash  Book  contains  a  record  of  all  currency  received  by  the  cash  drawer, 
and  of  all  paid  out  from  it. 

At  the  close  of  each  day  all  items  should  be  transferred  from  it  to  the  Cash  Book,  unless 
they  are  too  numerous.  In  that  case  the  items  should  be  grouped  under  their  several  accounts, 
and  the  totals  transferred  under  their  proper  titles  to  the  Cash  Book,  with  the  explanation 
"Per  Petty  Cash  Book." 

Receipts  should  be  taken  for  all  money  paid  out,  and  should  be  kept  on  file,  so  that  they 
can  be  produced  promptly  if  called  for. 


Left-hand  Page 


Petty  Cash  Book 


Right-hand  Page 


Dr.                              Cash 

1901 

Jan. 
Feb. 

2 
28 

30 
1 

Cash  sales  checks, 

White  &  May,  to  bal.  acct., 

W.  A.  Butler  &  Co.,  on  acct., 

Sanford  &  Weed,  on  acct., 

Cash  sales  checks. 

Cash  sales  checks, 

125 

8 
15 

25 

75 
50 

00 
00 
00 
00 
00 
00 

298 

00 

Balance, 

274 

05 

Cash                              Cr. 

1901 

Jan. 

2 
12 

Errand  boy  car  fare, 
300  2-cent  stamps. 
Freight  from  C.  J.  &  Co., 

Balance  in  draioer, 

(red  ink)  ^^^.^ 

6 
17 

(red 

10 
00 

85 
05 

ink) 

298 

00 

61.  The  Invoice  Book  is  a  book  in  which  invoices  are  pasted  after  they  have  been  properly 
journalized. 

62.  The  Bill  Book  contains  a  record  of  the  notes  received  from  other  firms  and  the  time 
drafts  accepted  by  other  firms,  and  of  the  notes  given  and  drafts  accepted  by  the  firm.  It 
shows  also  how  they  are  disposed  of.  The  book  should  always  agree  with  the  Ledger  accounts 
of  Bills  Receivable  and  Bills  Payable.  Sometimes  the  Bill  Book  is  divided  into  two :  Bills 
Receivable  Book  and  Bills  Payable  Book. 


m 


m 


■*  *  s  u. 

z  o  ?  o 
y  I  & 


o  ^ 


u   > 

til    > 


^ 


s: 


s  Q 

^  D- 


"1  ^<3 


s 


n 


a 


o 
^ 


42 


BOOKS  FOR  BOOKKEEPING 


43 


63.  The  Deposit  Book,  or  Bank  Book,  is  one  furnished  by  the  bank,  in  which  the  teller 
enters  the  total  amount  deposited  each  day  by  the  firm.  The  amount  entered  agrees  with  the 
total  of  the  deposit  ticket  which  is  handed  in  with  the  checks,  currency,  etc.,  presented  at  his 
window. 

The  Deposit  Book  is  a  book  of  reference,  showing  all  sums  deposited.  If  nt  is  left  at 
intervals  with  the  teller,  entries  are  made  of  the  sums  withdrawn,  and  the  book  is  balanced  so 
as  to  show  the  net  sum  on  deposit,  or  the  "balance  in  bank." 


Deposit  Book 


Left-hand  Pagk 


1901 


Jan. 


Feb. 


Feb. 


Deposits 


2 

3 

5 

5 

14 

21 

31 

1 


Deposit 


200.00 
dis.,     1.10 


Balance 


375 
275 
850 
78 
275 
475 
198 


95000 


3478 


31 


00 
80 
63 
50 
00 
00 
90 


83 


Right-hand  Page 


Retukned  Checks 

2 

75 

785 

8 

88 
50 

75 

50 

9 

63 

67 

80 

13 

00 

275 

93 

17 

80 

50 

40 

255 

00 

50 

00 

450 

00 

150 

00 

7 

50 

13 

50 

50 

00 

100 

00 

1200 

00 

785 

88 

650 

00 

3447 

ink)  SI 

31 

52 

Balance 

(red 

3478 

83 

64.  The  Deposit  Tickets  are  blanks  which  a  firm  is  required  to  fill  out  when  making  de- 
posits. They  give  the  name  of  the  depositor,  the  date,  and  the  amounts  deposited.  If  cur- 
rency or  gold  is  deposited  the  sum  of  each  is  given ;  if  checks,  the  amount  of  each  one  and  the 
total  are  given. 

Deposit  Ticket 


DEPOSITED   WITH 

Stutients*  National  Bank. 

By  //.  e.  atay  ^  &a. 

Chicago,  Ja/yilAyCilyJ  /O  jO/ 

Checks  on  Other  City 
Banks 

Coin,  Currency,  Checks  on 
this  Bank,  and  all  Items 
Payable  out  of  Chicago 

Dollars 

Cents 

Dollars 

Cents 

^5^ 
26 

00 

67 
^00 

60 
00 

i*/^ 

qs 

^67 
27^ 

60 

^8 

737 

^S 

44 


BUSINESS  RECORD 


65.  The  Check  Book  is  a  book  of  blank  checks  from  which  all  checks  are  made  out  (pages 
94,  95).  From  this  book  transfer  to  the  credit  side  of  the  Cash  Book  the  title  of  the  account, 
the  explanation,  and  the  amount  on  each  stub.  This  may  be  done  once  a  day,  when  ready  to 
balance  the  cash. 

66.  The  Bank  Account  should  be  kept  in  the  Check  Book.  Begin  by  tearing  out  the  check 
blanks  of  the  first  page,  leaving  the  stubs ;  then  turn  the  page  of  stubs  over  and  rule  the  reverse 
side  (left-hand  page)  as  shown  below.     If  desired,  the  fly  leaf  or  cover  may  be  used  instead. 

Check  Book 


Dr. 

Reverse  Side 

/^^/ 

j^cin^. 

s 

htpa^lt 

2000 

00 

0 

/•/ 

3/6 

00 

7 

u 

500 

00 

, 

8 

u 

ZOO 

00 

/O 

//■ 

^7-5 

00 

3^50 

00 

// 

a 

225 

00 

/6 

V/ 

750 

50 

Stub 

Cr. 

JVo.  /.            Bate,  JoUTU.  d,  1^0/ . 

Order  of  //.  6.  ^W-tvt   V^  ^0. 

Explanation,  f^oTl^  foh  jdVy. 

Account,  /if.  C  ^W^^t  y^  dla.    ■ 

250 

00 

$260.00. 

JVo.  2.        Bate,  fci1^.  SO,  f/0/. 

Order  of  Tfl  (Z.  W^Ciut. 

Explanation,  Q^  Ci^^cyiiwt. 

Account,  ?Tl.  (Z'.  TA}cilt, 

250 

00 

$260.00. 

On  the  first  left-hand  page  (debit)  enter  the  date  and  amount  of  the  deposits  each  day,, 
and  from  the  right-hand  pages  (credit)  make  out  the  checks  as  they  are  demanded.  Keep 
adding  the  amounts  of  the  checks  on  the  stubs,  in  pencil,  bringing  forward  the  footing  to  the 
next  page,  and  so  on. 

The  balance  is  ascertained  at  any  time  by  subtracting,  on  a  slip  of  paper,  the  sum  of  the 
checks  drawn  from  the  sum  of  the  deposits.  The  balance  may  then  be  entered  for  reference 
on  the  next  blank  stub,  in  pencil,  in  the  upper  left-hand  corner. 

At  the  end  of  the  month,  or  the  date  on  which  the  Bank  Book  is  balanced,  enter  in  the 
front  part  of  the  Check  Book  the  total  amount  withdrawn  as  per  Check  Book,  subtract  it  from 
the  sum  of  the  deposits,  and  begin  anew  with  the  balance. 


Check  Book  (Right-hand  Page,  full  width) 


Bate,  fmu   dO,  f^Of. 

Order  of  &.  //.  UM  ^  (^O. 
Explanation,  ^'Tb  Ci&(S>t. 
Account,  &.  /{.  Udt  V^  (^O. 

$60.00. 


600 


60 


00 


Chicago,  Jan.  30,  /^Of.      Xo.  ^. 
.Stutfents'  National  ISanfe 

of  Chicago. 
Fay  to  the  order  of  (^.  //.  Udt  ^  (&v  $60.00 

^  7^  Bollars. 


f.  ^.  ^mMA  ^  & 


BOOKS  FOR   BOOKKEEPING 


45 


67.  The  Pay  Roll  Book  is  an  auxiliary  book  containing  a  record  of  the  employees'  time 
and  salaries.  Tliis  book  is  required  in  almost  all  lines  of  business,  especially  in  factories  and 
houses  that  engage  a  large  force  of  help. 

Some  firms  have  printed  time  cards  which  the  employees  fill  in  when  reporting  their  time 
to  the  office,  and  others  have  a  time  register.  This  is  a  machine  which  indicates  on  cards  or  a 
sheet  each  employee's  number  and  time,  giving  the  hour  when  he  comes  in  and  when  he  goes 
out.  Each  man's  time  is  transferred  either  daily  or  weekly  from  the  time  cards  or  register  to 
the  Pay  Roll  Book.  If  one  of  the  employees  is  paid  on  account  or  in  full  before  pay  day, 
the  amount  is  noted  in  the  Pay  Roll  Book,  and  a  debit  (charge)  ticket  is  held  for  it  in  the  Cash 
Drawer,  or  the  amount  may  be  charged  direct  to  Pay  Roll  account  in  the  Cash  Book.  Many 
houses  find  it  necessary  to  subdivide  the  Pay  Roll,  in  order  to  charge  parts  of  it  to  different 
representative  accounts. 


Pay  Roll  Book 

For  the  Week  ending  December  7,  1901 


No. 

NAME. 

Occnpation. 

§ 
1 

o 

!^ 
2 

0 

3 

4 

0 

5 

t 

6 

03 
7 

Time. 

Bate. 

Total 

Am't 

Am't 

I'd 

a  ^ 

P4  O 

KEMAEKS. 

1 

P 

p 

u 

Am't. 

Reo'd. 

Due. 

1 

Kerfoot,  C.  H. 

7 

10 

10 

X 

10 

X 

37 

40 

14 

80 

14 

80 

2 

Chandler,  A.  D. 

10 

10 

10 

10 

10 

X 

50 

30 

15 

00 

15 

00 

3 

Mead,  C.  C. 

X 

X 

X 

2 

5 

5 

12 

35 

4 

20 

4 

20 

4 

Knight,  H.  E. 

X 

X 

X 

X 

X 

2 

2 

25 

50 

50 

5 

Hurlburt,  M.  E. 

X 

X 

X 

5 

5 

5 

15 

15 

2 

25 

2 

25 

6 

Harvey,  J.  A. 

X 

X 

X 

5 

5 

5 

15 

20 

3 

00 

3 

00 

7 

Lincoln,  D.  E. 

5 

10 

10 

10 

10 

12 

5 

62 

40 

24 

80 

5 

00 

19 

80 

8 

Harrison,  J.  M. 

10 

10 

12 

12 

12 

12 

68 

40 

27 

20 

27 

20 

9 

Hoff,  E.  E. 

12 

12 

12 

12 

12 

12 

72 

50 

36 

00 

36 

00 

10 

Grant,  M.  D. 

10 

10 

10 

10 

10 

10 

6 

65 

50 

32 

50 

5 

00 

27 

50 

If 

160 

25 

10 

00 

150 

25 

12 

13 

14 

15 

16 

17 

18 

Q 

UE 

ST 

I0I4 

S 

1.  How  are  the  books  in  Bookkeeping  classified?  2.  Define  each.  3.  Enumerate  the  set  of  books  used  in 
most  business  houses.  4.  How  many  kinds  of  Order  Books  are  there?  5.  Define  each.  6.  What  books  contain' 
a  record  of  the  goods  received  and  shipped  by  a  house  ?  7.  Explain  the  Petty  Cash  Book.  8.  In  which  book  are 
the  invoices  pasted  after  they  are  journalized?  9.  For  what  purpose  is  the  Bill  Book  used?  10.  Describe  the 
book  which  is  written  up  by  the  bank.  11.  Describe  the  Check  Book.  12.  What  account  is  kept  in  it? 
13.    What  is  the  Pay  Roll  Book?      • 

Note.  —  The  foregoing  Auxiliary  Books,  except  the  Bill  Book,  Deposit  Book,  and  Check  Book,  have  not 
been  introduced  in  any  of  the  exercises  for  the  reason  that  they  are  readily  understood  from  their  definitions 
and  illustrations,  and  their  rulings  may  vary  in  different  houses. 


46 


BUSINESS   RECORD 


Books  of  Entry  Described 

68.  The  Sales  Book  contains  a  record  of  the  sales  on  credit,  giving  the  names  and  addresses 
of  the  purchasers,  the  amounts  and  prices  of  the  goods  sold,  particulars  as  to  how  the  goods  are 
shipped,  etc.  It  also  contains  records  of  cash  sales  when  complete  accounts  are  desired  with 
the  customers.  The  prices  are  entered  opposite  the  items  and  the  proper  extensions  are  made. 
From  this  book  invoices  are  rendered  to  the  different  firms,  care  being  taken  to  insure  exact 
copies  of  the  invoices  in  the   book.      When   copying  make   a  check   opposite  each  invoice, 

thus:  "v/-" 

The  book  may  be  ruled  to  suit  the  firm's  convenience.  It  has  usually  two  money  columns 
at  the  right-hand  side  of  the  page.  The  left-hand  column  is  used,  when  there  is  more  than 
one  item,  for  the  entry  of  the  separate  amounts,  the  sum  of  which  is  written  in  the  right-hand 
column.  From  day  to  day  the  latter  column  is  added,  in  pencil,  and  at  the  end  of  the  month 
it  is  ruled  and  footed,  and  the  total  amount  posted  to  the  credit  of  Sales  account  in  the 
Ledger.  Thus  the  credit  amount  posted  from  the  Sales  Book  equals  the  sum  of  the  debits, 
which  are  posted  to  the  customers'  accounts. 

Sales  Book 


Aycxin^^    .l^IniAnJiJj.JOni 


LEDGER  PAGE 


ITEMS  TOTAL 


5 
C.G.  VJaJurijUh  V-  Co. 
0AxdjJV*U05.  l-ioyrUujLd  CaXa^,  TTLo. 

10  Mid.  PMidhjAJ^  JlcruA.  @  $^.00 

1J/^-13.Bjul%Co. 

0AxhM*D,l3.  St.Lcnuid,  TTlo. 

20-Mrh.CLp.pJjL6  @$5.J5 

SA^pfuuL  </u  rhuxi^,SnmjXA.  V-  Co. 

/2 

C.  Q.  U/aJmnML  V-  C^. 

OaxIjUv^SIO.  ]-{a/nA/OLd  CiJj^,lTho. 

l5SM^.PulbJruJu^Jlo-uA.  @$U.OO 

10  Sxrxjid  Juxyvu  ScrcLp  @  $U.50 

Vr^B.BjuL^Co. 

£)AydjlA*15.  St.JUcruld,lTlo. 

3  Mtld.lTlolciAAJld.  /50(^<22.  @5C^ 

5M4j^PiMlJruLnj^  JlcruA.  @,$U.OO 

^ScdjL6  %  Crr: 


bo 
^5 


75 
20 


00 

oa 


00 
\Q0 


^0 


1/5 


10500 


^ 


355 


00 


00 


00 


00 


Note.  —  The  entries  of  the  above  specimen , Sales  Book  are  posted  in  the  specimen  Ledger  on  page  53. 
student  should  trace  each  of  the  five  entries  from  one  book  to  the  other. 


The 


BOOKS   FOR   BOOKKEEPING  47 

Note. —  hi  tlie  following  exercises  the  student  is  to  act  as  bookkeeper  and  do  all  that  a  bookkeeper  would  be 
expected  to  do  in  the  transactions  indicated  by  what  the  manager  says.  The  manager's  directions,  of  course,  are 
supposed  to  be  given  at  different  times  during  the  day.  The  name  of  the  firm  is  John  8tewart  &  Co.  John  Stewart 
is  the  proprietor  and  manager. 

EXERCISE  12 

Make  the  entries  in  the  Sales  Book  for  the  following  transactions  (see  note  above) :  — 

Manager's  Instructions  to  his  Bookkeeper 

January  2,  19 — .     "These  orders  have  been  shipped  :  — 

"  A.  B.  Rider  &  Son,  Rock  Island,  111.  Order  No.  4090 ;  25  bbls.  apples  @  $5.50,  25  bbls. 
St.  Louis  flour  @  i|4.50. 

"  Geo.  F.  Monroe  &  Co.,  Milwaukee,  Wis.  Order  No.  350 ;  10  bbls.  apples  @  15.50, 15  bbls. 
St.  Louis  flour  @  $4.50." 

Note.  —  Enter  the  total  amount  of  the  above  sale  as  $  125.00.  This  will  cause  an  error  of  $2.50.  This  item 
will  be  explained  later. 

January  3.  —  "  Enter  these  orders  :  — 

"W.  A.  Crocker  &  Co.,  Chicago.  Order  No.  200;  10  boxes  Ivory  soap  @  $4.50,  15  bbls. 
Pillsbury  flour  @  $4. 

"C.  B.  Frost  &  Co.,  Chicago.     Order  No.  215;   3  bbls.  currants,  350  lb.  each,  @  5^." 

January  15.  —  "Here  are  the  orders  shipped  to-day  :  — 

"White  &  May,  Chicago.     Order  No.  150;  2  bbls.  Pillsbury  flour  @  $4. 

"  W.  A.  Butler  &  Co.,  Chicago.     5  bbls.  apples  @  $5.50,  5  boxes  Ivory  soap  @  $4.50. 

"Sanford  &  Weed,  Chicago.     Order  No.  967 ;  2  bbls.  N.  O.  molasses,  100  gallons,  @  49^." 

January  31.  —  "Rule  and  add  the  Sales  Book  for  the  month." 

The  Cash  Book 

69.    The  Cash  Book  should  contain  a  record  of  all  money  received  and  paid  out. 

The  left-hand  page  is  the  debit,  and  contains  a  record  of  all  the  money  received.  The 
right-hand  page  is  the  credit,  and  contains  a  record  of  all  the  money  paid,  transferred  from  the 
Check  Book  and  Petty  Cash  Book.  When  the  entry  is  for  a  check,  insert  "ck."  at  the  end  of 
the  explanation,  and  when  for  currency,  insert  "cy."     This  information  will  often  be  of  value. 

The  Cash  Book  has  generally  two  money  columns  on  each  page.  One  is  called  "Sundries" 
and  is  used  for  all  accounts  whose  amounts  are  posted  every  day;  the  other  column  may  be 
employed  for  any  particular  account  whose  footing  is  posted  at  the  end  of  each  month. 

The  book  is  added  up  from  day  to  day,  in  pencil,  and  is  balanced  and  ruled  at  the  end  of 
each  month  by  inserting  the  balance  in  red  ink  on  the  side  which  is  the  smaller,  so  that  both 
sides  will  have  the  same  footing.  On  the  first  of  the  next  month  the  balance  is  brought  for- 
ward, in  black  ink,  to  the  opposite  side  on  the  next  pair  of  pages.  When  the  debit  side  of  the 
Cash  Book  is  the  greater,  the  difference  between  the  two  sides  is  the  Balance  on  hand,  but 
when  the  credit  side  is  the  greater  the  difference  is  the  Balance  overdrawn. 

The  Cash  Book  is  the  Cash  account,  and  for  this  reason  many  houses  do  not  have  a  Cash 
account  in  the  Ledger,  but  transfer  the  Cash  account  balance  every  month  from  this  book  to 
the  trial  balance.  Some  houses  divide  the  Cash  Book  into  several  books,  either  bound  or  in 
loose  sheets. 

The  name  of  an  account  written  on  the  debit  side  of  the  Cash  Book  debits  Cash  account 
and  credits  the  account  named,  but  if  written  on  the  credit  side  it  debits  the  account  named 
and  credits  Cash  account.  Hence,  from  the  debit  side  of  the  Cash  Book  post  to  the  credit  side 
of  the  proper  accounts  in  the  Ledger,  and  from  the  credit  side  post  to  the  debit  side  of  the 
proper  accounts  in  the  Ledger. 


48 


BUSINESS  RECORD 


Cash  Book  (Left-hand  Page) 


Bt. 


CoaA- 


LED. 
PAGE 


NAME  OF  ACCOUNT 


EXPLANATION 


SALES 


SUNDRIES 


IQOI 

Jjdr.l 
I 
lb 
1^ 

2.7 

28^ 


/ 

21 
/ 

22 
/ 

23 


ScbljLd 

C.g.lUaJiyruJLy-Co. 

m.a.Lyixiy-Co. 

ScU&Ld 

SczAd 


Coa/l  AoJjU)  cJuycAd 

Oru  cuiyCxriyonX  cA. 

Jti  full  0/  axx>Z:,  cA. 

/  Zl/AotjL,  cclaIi  MxjJjl 
^-n    ff         +     cAM5sri5 
10  cut.  axycZ.       cUd.  ^.63 

C.  M  £unru2/rh   cA. 

CoaA  AoJjU)  cAjuJtd 

Citu  IScurvk  cUA/ocL 

cruAy  30cLcuu  TbotjL 

Jcrtal  fcfh  JjJnAAXXAJJ- 


Q^yS 


/75 


3J5 


21/8(^53 


I02UU5 


q5 


00 


50 


95 
WO 

Ub3 
225 

500 


I02^^5 


5/91 


00 
00 

3S\ 
00 

00 


36 


Note.  —  The  above  entries  that  concern  Bills  Receivable,  Bills  Payable,  and  Sales  accounts,  and  the  account  of 
C.  G.  Warner  &  Co.,  are  posted  in  the  specimen  Ledger  on  page  53. 

Note.  — Study  the  entry  of  Feb.  27,  W.  H.  Storm  &  Co.  What  amount  of  money  did  W.  H.  Storm  &  Co. 
actually  pay?  If  the  entry  had  been  made  for  $458.75  instead  of  $463.38,  it  would  have  been  necessary  to  make  a 
Journal  entry  to  credit  W.  H.  Storm  &  Co.,  and  debit  Interest  and  Discount,  with  f  4.63.  In  order  to  save  labor 
and  to  record  the  entire  transaction  in  one  book  (the  Cash  Book),  W.  H.  Storm  &  Co.  are  credited  and  Cash  is 
debited  with  $463.38,  and  on  the  opposite  page  Cash  is  credited  and  Interest  and  Discount  is  debited  with  $4.63. 

EXERCISE   13 

Make  the  entries  in  the  Cash  Book  and  in  the  Check  Book  (page  44)  for  the  following 
transactions  (see  note,  page  47) :  — 

Manager's  Instructions  to  his  Bookkeeper 
January  2. —  "I  began  business  this  day,  investing  cash,  $2000. 

"  Deposit  to-day  $2000."  (Enter  it  in  the  Check  Book,  and  have  it  entered  in  the  Deposit 
Book.) 

"Write  out  a  check  for  $25,  to  the  order  of  Currency,  for  the  cash  drawer." 

Note.  —  A  check  which  is  made  out  to  the  order  of  Currency,  or  to  some  individual,  to  be  used  for  the  cash 
drawer,  is  never  entered  on  the  Cash  Book.     Instead,  entries  are  made  as  the  money  is  disbursed  from  the  cash 


BOOKS   FOR   BOOKKEEPING 
Cash  Book  (Right-hand  Page) 


49 


CclaA                                     C^. 

DATE 

LEO. 
PAGE 

NAME  OF  ACCOUNT 

EXPLANATION 

EXPENSE 

SUNDRIES 

/QO/ 

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drawer.     When  transferring  amonnts  of  other  checks  from  the  Check  Book  to  the  Cash  Book,  mark  on  each  stub 
the  page  of  the  Cash  Book  on  which  the  amount  is  entered,  thus  :  "J^ntered,  C.B.  3." 

Note.  —  The  checks  made  by  each  student  should  be  inclosed  in  an  envelope  when  they  are  supposed  to  be 
sent  out.  At  the  end  of  the  exercise  they  should  be  presented  to  the  teacher,  with  the  Deposit  Book  (which  is 
supposed  to  be  left  at  the  bank  to  be  balanced) ;  see  page  55. 

"  Write  out  a  check  for  $250  to  the  order  of  H.  O.  Sweet  &  Co.,  rent  for  January. 

"  Give  the  errand  boy  10  cents  for  car  fare. 

"What  is  the  total  amount  of  the  cash  sales  to-day?"     (Per  cash  sales  checks,  $125.) 

January  12.  —  "Pay  this  freight  charge  on  goods  from  C.  Johnson  &  Co.,  bought  f.o.b. 
New  York,  $17.85,  in  currency. 

"What  is  the  total  amount  of  the  Cash  Sales  to-day?"     (Per  cash  sales  checks,  $75.) 

January  28.  — "  This  is  a  memorandum  of  the  money  which  the  errand  boy  collected, 
(/ount  the  currency  and  make  the  entries:  — 

"  W.  A.  Butler  &  Co.,  on  account,  $15.  Sanford  &  Weed,  on  account,  $25.  White  &  May, 
to  balance  account,  $8. 

"  Enter  these  remittances  received  to-day ;  Check,  $50,  from  A.  B.  Rider  &,  Son,  to 
bahmce  invoice  January  2  ;  and  a  check  for  $75  from  W.  A.  Crocker  &  Co.,  to  ai)ply  on  account. 

"  What  is  the  total  amount  of  the  cash  sales  to-day  ?  "     (Per  cash  sales  checks,  $75.) 


50  '  BUSINESS  RECORD 

January/  30.  —  "Deposit  to-day  $440. 

"Mail  checks  to  these  firms:    M.  A.  Wait,  on  account,  $250.     C.  B.  Moore  &  Co.,  to 
balance  account,  $55.     C.  H.  Odell  &  Co.,  on  account,  $60.    C.  Johnson  &  Co.,  on  account,  $250. 
"  Pay  this  bill  of  $22  for  stationery  by  check,  to  Wells,  Smith  &  Co. 
"  What  is  the  total  amount  of  the  cash  sales  to-day  ?  "     (Per  cash  sales  checks,  $50.) 
January  31.  —  "Rule  and  balance  the  Cash  Book  for  the  month." 

•  The  Journal 

70.  The  Journal  is  used  for  all  entries  that  can  not  be  made  in  either  the  Sales  Book  or  the 
Cash  Book.  By  this  is  meant  all  miscellaneous  entries.  The  usual  form  of  Journal  is  illus- 
trated on  page  51. 

EXERCISE   14 

Make  the  entries  in  the  Journal  for  the  following  transactions :  — 

Manager's  Instructions  to  his  Bookkeeper 

January  2.  —  "I  began  business  this  day,  investing  $3000  in  merchandise." 
January  5.  —  "George  F.  Monroe  &  Co.  have  written  advising  us  of  an  error  of  $2.50  in 
invoice  to  them  of  .January  2.    Investigate,  and  if  there  was  such  an  error,  make  the  correction." 
Note.  —  This  is  to  be  done  by  a  new  entry — not  by  making  any  change  in  what  has  ah-eady  been  written. 
"C.  B.  Frost  &  Co.  have  inclosed  to  us  this  Debit  Memojrandum. "     (Page  87.) 


Chicago, 

Jai 

uary 

5,19.... 

C.  B. 

Frost  &  Co. 

John 

Stewart 

& 

Co.. 

City. 

Debit  Memorandum. 

25  1b. 

currants 

@5^ 

$1.25 

Shortage  on  invoice  January 

3. 

"  Ascertain  the  facts  regarding  it  from  the  shipping  clerk.  .  .  .  Did  he  tell  you  that  one 
of  the  barrels  fell  from  the  wagon,  thus  accounting  for  the  shortage?  Very  well,  give  C.  B. 
Frost  &  Co.  credit  for  the  shortage." 

January  26.  — "  George  F.  Monroe  &  Co.  inclosed  to  us  their  note  to  balance  account, 
$122.50,  dated  January  21,  for  30  days,  payable  at  the  Milwaukee  Students'  Bank. 

"A.  B.  Rider  &  Son  inclosed  in  their  letter  this  note :  $200,  dated  January  24,  for  60  days 
with  interest  at  6^,  payable  at  the  Rock  Island  Students'  Bank." 

January  31.  — "Give  me  credit  for  salary  at  the  rate  of  $150  a  month. 

"Credit  H.  O.  Sweet  &  Co.  with  rent,  $250  a  month. 

"Write  out  a  note  for  $355  to  the  order  of  Reid,  Smith  &  Son,  and  date  it  to-day,  pay- 
able in  30  days  at  the  Students'  National  Bank,  to  balance  our  account  to  February  1.  Before 
writing  the  note  see  if  it  will  balance  the  account,  or  that  you  have  invoices  on  file  to  cover 
the  amount."     (See  page  52.) 

"This  is  the  last  day  of  the  month.  Do  not  fail  to  journalize  the  invoices  received  during 
the  month."     (See  page  52.) 

Note,  —  Copy  the  invoices  on  blanks,  filling  in  the  year,  and  then  journalize  them,  crediting  the  various 
firms  and  dealers  with  the  goods  supplied,  and  debiting  the  proper  representative  accounts.  What  entry  was 
made  in  the  Cash  Book,  under  date  of  January  30,  for  $22?  If  Wells,  Smith  &  Co.  were  debited  with  this 
amount,  their  invoice  (page  52)  should  be  journalized  with  the  rest;  if  the  amount  was  charged  directly  to  the 
representative  account,  no  Journal  entry  is  now  necessary  for  that  invoice. 

Mark  on  each  invoice  the  account  which  is  to  be  charged  with  the  amount,  and  as  soon  as  the  invoice  is 
entered  in  the  Journal,  write  on  the  invoice  the  Journal  page  on  which  it  is  entered,  thus :  "  Entered,  J.  2." 


BOOKS  FOR   BOOKKEEPING 


51 


Journal 


CJ\A/rx2x^,  JJ^J/ijXyOJiJi/gn/ 


11 


23 


22 


// 

C.Q.WhJbnMb  ^Co. 
2U^.PiJAinAMj^Ulau^ 
AjJMJirnJuL  CLd  djiAycZuM.  @  $14.00 

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00 


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50 


^OTp:.  —  A  few  of  the  entries  in  the  above  specimen  Journal  are  posted  in  the  specimen  Ledger  on  page  53. 


52  BUSINESS  RECORD 

Invoices  received  during  the  Month 

Chicago,  111.,  January  4,  19 — 

John  Stewart  &  Co.,  City. 

Order  No.  3.  Bought  of  Reid,  Smith  &  Son. 

15  bbls.  vinegar,  each  50  gal.,  @  .10  $75.00 

20  chests  Oolong  tea,  each  40  lb.,  @  .35  280.00     $355.00 


Chicago,  January  5,  19 

John  Stewart  &  Co.,  City. 

Order  No.  2.  Bought  of  C.  B.  Moore  &  Co. 

10  bbls.  oatmeal,  @  $5.50  $55.00 


New  Yokk,  January  10,  19 

John  Stewart  &  Co.,  Chicago. 

Bought  of  C.  Johnson  &  Co. 

25  bbls.  W.  C.  sugar,  each  330  lb.,  @  .04  $330.00 

80  bbls.  N.  O.  molasses,  1500  gal.,  @  .38  570.00     $900.00 


Minneapolis,  Minn.,  January  4,  19.... 

John  Stewart  &  Co.,  Chicago. 

Bought  of  M.  A.  Wait. 
25  bbls.  flour,  -  @  $3.50  $87.50 

100  boxes  Ivory  soap,  .  @     3.50  350.00     $437.50 


Chicago,  January  30,  19.... 

John  Stewart  &  Co.,  City. 

Bought  of  Wells,  Smith  &  Co. 
5000  Bill  heads,  $5.00 

2000  Letterheads,  7.00 

5000  Envelopes,  5.00 

5000  Business  cards,  5.00       $22.00 

Paid, 

Wells,  Smith  &  Co. 

*  Chicago,  January  5,  19.... 

John  Stewart  &  Co.,  City. 

Order  No.  5.  Bought  of  C.  H.  Odell  &  Co. 

2  Curtain  desks,  @  $25.00         $50.00 

2  Chairs,  @    10.00  20.00       $70.00 


Chicago,  January  3,  19 — 

John  Stewart  &  Co.,  City. 

Order  No.  6.  Bought  of  George  Beecher  &  Son. 

50  bbls.  apples,  @  $3.85  $192.50 


BOOKS   FOR   BOOKKEEPING 


53 


The  Ledger 


71.    The  Ledger  contains  the  accounts  of  a  business,  showing  the  results  of  its  transactions, 
arranged  according  to  the  persons  and  things  to  which  they  refer. 


Ledger 


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NoTK.  —  The  above  Ledger  contains  entries  posted  from  the  Books  of  Original  Entry  on  pages  46,  48,  49, 
and  51. 


54  BUSINESS  RECORD 

The  Ledger  is  ruled  to  meet  the  requirements  of  the  business  engaged  in.  Each  page  is 
usually  ruled  with  a  debit  and  a  credit  side,  separated  by  a  heavy  line- 
When  only  one  Ledger  is  used  the  accounts  are  arranged  therein  so  that  the  stock  accounts 
come  first,  and  following  them  the  representative  accounts,  the  partners'  private  accounts,  and 
the  traveling  agents'  accounts,  etc.  Then  ample  space  is  allowed  in  case  any  other  accounts 
of  the  same  nature  should  be  added  during  the  year.  In  the  middle  of  the  Ledger  the 
customers'  accounts  appear,  and  in  the  back  of  the  Ledger  the  purchase  accounts. 

EXERCISE  15 

Post  the  Books  of  Original  Entry  of  John  Stewart  &  Co.  as  follows  (see  rules  for  posting, 
below):  — 

January  2.  —  Turn  to  the  Journal  and  post  the  entry  made  on  this  date.  Next  post  the 
Sales  Book,  then  the  Cash  Book. 

January  3.  —  Post  the  Sales  Book. 

January  5.  —  Post  the  Journal. 

January  12.  —  Post  the  Cash  Book. 

January  15.  —  Post  the  Sales  Book. 

January  26.  —  Post  the  Journal. 

January  28.  —  Post  the  Cash  Book. 

January  30. —  Post  the  Cash  Book. 

January  31.  —  Post  the  Journal,  Cash  Book,  and  the  Sales  Book.  The  Ledger  is  now 
ready  for  the  trial  balance. 

EXERCISE   16 

Take  off  a  trial  balance.     (See  page  26.) 

Posting  the  Books  of  Original  Entry 

72.  When  posting  from  the  Journal  write  the  letter  "J"  (for  Journal)  just  before  the 
number  entered  in  the  folio  column  in  the  Ledger;  write  the  letter  "C"  if  posting  from  the 
Cash  Book,  and  the  letter  "S"  if  from  the  Sales  Book. 

73.  The  Sales  Book.  —  Post  daily  the  amounts  to  the  debit  side  of  the  individual  accounts. 
On  the  last  day  of  the  month  rule  off  the  Sales  Book  and  post  its  total  amount  to  the  credit  of 
Sales  account. 

74.  The  Cash  Book. — Post  daily  the  amounts  from  the  sundries  column  on  the  debit  side 
of  the  Cash  Book  to  the  credit  side  of  the  proper  accounts  in  the  Ledger,  and  also  the  amounts 
from  the  sundries  column  on  the  credit  side  of  the  Cash  Book  to  the  debit  side  of  the  proper 
accounts  in  the  Ledger. 

The  total  of  each  special  column,  headed  "Sales"  and  "Expense"  (in  the  Cash  Books  of 
some  houses  there  are  also  others),  is  posted  at  the  end  of  the  month  to  its  respective  account. 

When  there  is  a  Cash  account  in  the  Ledger,  post  the  total  cash  receipts  to  the  debit  of 
Cash  account  at  the  end  of  the  month,  and  also  the  total  cash  disbursements  to  the  credit  of 
Cash  account. 

75.  The  Journal.  —  Post  daily  the  amounts  in  the  debit  column  to  the  debit  side  of  the 
proper  accounts,  and  also  the  amounts  in  the  credit  column  to  the  credit  side  of  the  proper 
accounts. 

76.  Many  bookkeepers  do  not  insert  the  Ledger  pages  in  the  Books  of  Original  Entry 
until  the  amounts  have  been  posted.  While  this  is  correct,  yet  in  large  houses  too  much  time 
would  be  lost  if  this  method  were  adopted,  since  the  Indexes  and  Ledgers  are  in  demand  at 


BOOKS   FOR  BOOKKEEPING 


55 


all  hours  of  the  day.  It  is  therefore  necessary  that  the  bookkeeper,  or  his  assistant,  insert  the 
folios  in  the  Books  of  Original  Entry  whenever  the  indexes  are  available.  As  each  amount  is 
posted,  the  folio  opposite  is  checked,  thus:  "y/,"  and  at  the  same  time  the  folio  of  the  Book  of 
Original  Entry  is  written  in  the  Ledger  opposite  the  amount. 

Bank  Account  —  Checking 

77.  The  Bank  Account  is  a  part  of  the  Cash  account,  and  need  not  be  an  account  in  the 
Ledger,  but  a  record  of  it  should  be  kept  in  the  Check  Book,  as  shown  on  page  44. 

When  the  amount  of  the  debit  side  is  in  excess  of  that  on  the  credit  side,  the  difference  is 
the  balance  in  bank,  but  when  the  amount  of  the  credit  side  exceeds  that  on  the  debit  side,  the 
difference  is  the  balance  overdraw7i,  often  called  "overdraft." 

At  the  end  of  each  month  the  Deposit  Book  should  be  left  at  the  bank  to  be  balanced,  in 
order  to  ascertain  the  exact  balance  in  bank  according  to  the  bank's  books. 

To  THE  Teacher.  —  The  Deposit  Book,  which  was  left  at  the  bank  (with  the  teacher)  to  be  balanced,  at  the 
end  of  Exercise  13  (see  note,  page  49),  is  now  to  be  returned  to  the  student,  with  the  cashed  checks.  Let  it  show 
as  cashed  all  the  checks  issued  in  Exercise  13  except  No.  4  —  that  for  $  55  in  favor  of  C.  B.  Moore  &  Co.,  which 
the  teacher  should  retain. 

Several  students  may  be  appointed  bank  clerks  to  write  up  the  Deposit  Books  from  the  illustration  on  page 
43,  and  to  inclose  the  cashed  checks  in  each  student's  book.  If  desired,  however,  the  student  may  write  up  his  own 
Bank  Book  according  to  the  instructions  given. 

As  check  No.  4  is  supposed  to  be  still  out,  the  Deposit  Book  should  appear  as  follows :  — 


Deposits 

1901 

Jan. 
Feb. 

2 
30 

1 

Deposit, 

2000 
440 

00 
00 

2440  00 

Balance, 

1583  00 

25 
250 
250 

Balance 


00 
00 
00 

(red 


Checks  Ketukned 


60 

250 

22 


00 
00 
00 


857  00 

\nk)  1583100 


2440  00 


EXERCISE   17 
Check  the  Bank  Account,  as  directed  in  the  general  rule  below. 

78.  Checking  the  Bank  Account.  First.  —  Check  the  deposits  in  the  Check  Book  with  those 
in  the  Deposit  Book,  or  on  the  bank's  statement ;  check  with  the  latter  when  it  is  received. 

Second.  —  Compare  the  stubs  in  the  Check  Book  with  the  returned  checks,  marking  the 
stub  of  each  returned  check,  thus  :  "y'."  Great  care  must  be  exercised  in  having  the  stubs 
correspond  with  the  checks.  When  the  amount  on  the  returned  check  is  different  from  that 
on  the  stub  (provided  the  check  has  not  been  fraudulently  raised),  the  latter  should  be  made 
to  agree  with  the  check  (the  amount  paid  by  the  bank).  See  that  the  correction  is  also  made 
in  the  Cash  Book. 

Third.  —  Carefully  examine  the  Check  Book,  for  the  month,  and  on  a  slip  of  paper  prepare 
a  list  of  the  numbers  and  amounts  of  all  outstanding  checks,  heading  it  "Checks  Out."  It 
frequently  occurs  that  some  checks  of  previous  months  have  not  been  presented  at  the  bank ; 
therefore  examine  far  enough  back  so  as  to  obtain  all  those  that  are  still  out. 


66 


BUSINESS  RECORD 


Fourth. — On  the  slip  write  the  sum  of  the  deposits,  and  underneath  it  the  amount  to  which 
the  checks  drawn  "  foot  up,"  according  to  the  Check  Book.  The  difference  should  give  the 
balance  in  bank  per  Check  Book.  Compare  this  balance  with  that  shown  by  the  Deposit  Book 
or  the  bank's  statement.  If  there  are  checks  outstanding,  the  bank's  balance  will  be  greater. 
Hence,  to  obtain  the  bank  balance,  add  the  sum  of  the  checks  out  to  the  balance  which  the 
Check  Book  shows,  on  the  balance  slip.  This  slip  of  paper  should  be  filed  with  the  returned 
checks.  If  preferred,  the  report  may  be  copied  in  red  ink  on  the  debit  side  of  the  Check  Book. 
Use  for  this  purpose  the  page  opposite  the  last  check  drawn  on  date  of  balancing. 

Continue  the  next  month's  business  on  the  Check  Book,  proceeding  as  before  ;  and  in  mak- 
ing up  each  subsequent  month's  balance,  if  any  information  is  required,  refer  to  the  previous 
slip  on  which  the  Bank  account  was  balanced. 


Monthly  Bank  Account  Memorandum 


H.  B.  Clay  &  Co.,  February  28, 

1901 

Balance  per  Check  Book,  Feb.  7, 

$2341.43 

Sum  of  deposits  from  Feb.  7  to  Feb.  28, 

3964.60 
6306.03 

Sum  of  checks  drawn  from  Feb.  7  to  Feb. 

28, 

5809.00 

Balance  in  bank  per  Check  Book,  Feb.  28, 

497.03 

Check  out,  Feb.  28,  No.  15, 

9.75 

Balance  in  bank,  per  Bank  Book, 

506.78 

Cash  Account  —  Balancing 

79.  The  Cash  account,  being  the  most  important  account  in  a  business,  has  a  book  ruled 
especially  for  it,  called  the  "Cash  Book."  The  Cash  Book  should  contain  a  full  record  of  all 
the  money,  consisting  of  Checks,  Currency,  Bank  Drafts,  and  Money  Orders,  received  and 
paid  out.     A  receipt  should  also  be  on  file  for  every  item  paid  out. 

It  is  customary  to  balance  the  Cash  Book  daily  and  to  compare  its  balance  with  the 
amount  of  cash  in  the  bank  and  in  the  drawer.     This  is  called  "  Balancing  the  Cash." 

80.  Balancing  the  Cash.  First.  —  Count  the  contents  of  the  cash  drawer,  placing  the 
amounts  of  currency,  checks,  money  orders,  etc.,  in  separate  columns.  The  sum  of  the  different 
columns  should  represent  what  there  is  in  the  cash  drawer. 

Second.  —  Find  the  balance  in  bank,  as  shown  by  the  Check  Book.  This  amount,  com- 
bined with  what  there  is  in  the  drawer,  gives  the  balance  on  hand.  The  Cash  Book  balance 
should  agree  with  this  amount  ;  if  it  does  not,  an  error  has  occurred.  If  the  Cash  Book  bal- 
ance is  the  greater,  the  Cash  is  short.,  but  if  the  amount  in  the  drawer  when  combined  with 
that  in  the  bank  is  the  greater,  the  cash  is  over. 

Sometimes,  instead  of  a  balance  in  bank,  the  Check  Book  may  show  an  overdraft,  or  bank 
balance  overdrawn ;  that  is,  the  total  amount  of  checks  drawn  may  be  greater  than  the  sum  of 
the  deposits.  Such  an  overdraft  may  be  greater  or  less  than  the  amount  in  the  drawer.  If  it 
is  less,  subtract  it  from  the  amount  in  the  drawer,  and  the  difference  is  the  balance  on  hand. 
When  the  overdraft  is  in  excess  of  the  amount  in  the  drawer,  deduct  the  latter  amount  from 
the  overdraft,  and  the  difference  is  the  cash  balance  overdrawn.  The  balance  should  agree, 
both  in  amount  and  in  kind,  with  the  Cash  Book  balance. 

The  cash  should  be  balanced  daily,  in  a  small  book  or  on  a  sheet  of  paper.  In  the  latter 
case  file  the  papers  in  an  envelope  for  future  reference. 


BOOKS  FOR  BOOKKEEPING 
Daily  Cash  Balance  Sheet 


57 


January  15, 

1901 

— 

Currency  and  Coin, 

Checks. 

Honey  Orders. 

Dr.  Cash  Tickets. 

$40.00  in  gold 

$85.50 

$8.75 

$25.00  C.B.M 

80.00   "  $20  bills 

120.00 

15.00 

5.00  Freight 

50.00   "      10    " 

35.50 

20.00 

30.00 

35.00   "        1    " 

13.08 

43.75 

7.25   "  25^ 

7.50 

.55   "     5^ 

10.50 

Or.  Cash  Tickets. 

.23   "     1^ 

,     272.08 

$5.00  H.B.C. 

213.03  Currency  and  Coin 

272.08  Checks 

43.75  Money  Orders 

Cash  Book. 

30.00  Dr.  Cash  Tickets 

Cash  received     $  1676.30                   | 

558.86  In  drawer 

Cash 

paid  out          647.44 

5.00  Cr.  Cash  Ticket 

Balance 

on  hand  1028.86 

553.86  Balance  in  drawer 

475.00  Balance  in  bank 

1028.86  Balance  on  hand 

To  THE  Teacher.  —  In  order  that  the  students  may  thoroughly  understand  the  above  rule  and  may  acquire 
experience  in  balancing  cash,  in  Exercise  18,  each  student  should  be  supplied  with  blank  cards  (or  anything  else 
to  represent  money)  and  blank  checks.  These  checks  may  be  taken  from  the  back  part  of  the  Check  Book.  The 
currency  and  checks  received  should  be  placed  in  his  cash  box,  upon  their  receipt,  after  the  entries  have  been  made, 
and  should  be  taken  out  as  they  are  required. 

EXERCISE   18 

The  name  of  the  firm  in  this  exercise  is  D.  C.  Raymond  &  Co.  The  manager  is 
D.  C.  Raymond.  It  is  assumed  that  the  firm  has  existed  for  some  time.  The  transactions  for 
the"  Cash  Book  date  from  February  1,  with  a  cash  balance  overdrawn. 

For  the  following  transactions  make  the  entries  in  the  Cash  Book,  Check  Book,  and 
Deposit  Book,  and  balance  the  cash  at  the  end  of  each  day's  transactions. 

Manager's  Instructions  to.  his  Bookkeeper 

Februari/  1.  —  "  On  January  31  the  Cash  account  showed  a  balance  of  $350  as  overdrawn. 
This  was  also  the  amount  overdrawn  at  the  bank."  (Enter  the  balance  in  the  Cash  Book  and 
also  in  the  Check  Book.) 

"Enter  this  check  for  $  750,  from  W.  D.  Lowe  &  Co.,  to  pay  their  note  due  to-day  ;  and 
this  check  for  $250,  from  D.  M.  Bates  &  Co.,  to  balance  account. 

"Deposit  this  morning  the  checks  in  the  safe  (81000)  to  make  good  the  overdraft,  as 
shown  by  the  Check  Book. 

"Write  out  a  check  for  $50,  to  the  order  of  currency,  for  the  cash  drawer."  (Currency 
received  from  bank  :  One  $  20  bill,  two  $  10  bills,  one  $5  bill,  four  silver  dollars,  three  25-cent 
pieces,  and  five  5-cent  pieces.) 

"  Write  out  a  check  for  $  35  to  the  order  of  May  &  Harvey  for  a  desk  and  chair  purchased 
of  them  to-day. 

"  Enter  these  remittances  :  Wells,  Morgan  &  Co.,  check  for  $275  on  account;  M.  A.  White's 
check  for  $35.75,  to  balance  account." 

Note.  —  Fill  out  blank  checks  for  the  remittances  received,  placing  the  checks  in  the  cash  box. 


58  BUSINESS  RECORD 

"  Give  the  errand  boy  75  cents  for  a  box  of  pens. 

"  Give  the  teamster  $5.25  in  currency  to  pay  the  freight  charges  on  goods  received  from 
Brown  &  Roy,  New  York,  bought  f.o.b..  New  York." 

February  2.  —  "  This  is  the  money  which  the  errand  boy  collected  :  G.  A.  Chase  &  Co.,  on 
account,  check  for  $65  ;  Russell  &  White,  to  balance  account,  check  for  $45.50  ;  C.  M.  Lord 
&  Co.,  on  account,  currency,  $10.50."  (Currency  received  :  Two  $5  bills  and  one  50-cent 
piece.     Fill  out  blank  checks  for  the  other  amounts.) 

"Write  out  a  check  for  $150  to  my  order  and  then  prepare  the  deposit."  (Total 
amount,  $421.25.) 

"  When  you  go  to  the  bank,  have  this  check  cashed  for  me." 

February  b. — "Mail  checks  as  follows  :  H.  O.  Sweet  &  Co.,  rent  for  February,  $150  ; 
Reid,  Smith  &  Son,  on  account,  $375  ;  F.  B.  Long  &  Co.,  to  balance  account,  $25.50." 

February  11.  — "Write  out  a  check  for  $175  to  the  order  of  the  Students'  National  Bank, 
for  our  note  due  to-day,  which  we  gave  to  Reid,  Smith  &  Son. 

"  Let  me  have  $25.     Make  a  ticket  for  it,  and  I  will  report  later." 

Note.  —  Oa  a  slip  of  paper  make  a  Debit  Ticket  by  writing  the  word  "  Debit,"  and  also  the  date  and  the 
amount,  and  have  it  signed  by  the  party  (D.  C.  Raymond).  Place  it  in  the  cash  box  and  include  it  in  the  Cash 
when  balancing. 

"Enter  this  currency,  $15,  received  for  cash  sales."  (Currency  received  :  One  $10  bill 
and  one  $5  bill.) 

February  15.  — "  Send  out  for  500  2-cent  stamps. 

"  Charge  me  with  $  10  of  that  ticket  you  have  in  the  drawer.  Here  is  the  remaining 
$15.  Be  sure  you  destroy  the  cash  ticket."  (Currency  received:  One  $10  bill  and  one 
$5  bill.) 

"Give  Mrs.  D.  C.  Raymond  $25  in  currency  and  charge  it  to  my  account." 

QUESTIONS   FOR   DISCUSSION 

1.  A  bill  of  merchandise  is  paid  for  by  a  check,  but  the  check  proves  worthless.  What  entries  should  be 
made,  and  why?  2.  Is  a  business  transaction  ever  recorded  in  which  there  is  only  one  party  —  the  proprietor? 
Explain.  3.  What  different  things  might,  under  varying  circumstances,  be  treated  in  your  records  as  cash? 
4.  Suggest  a  set  of  books  for  a  private  household.  Suggest  ledger  accounts.  5.  Suppose  that  on  balancing  the 
cash  it  is  found  to  be  $5  over  and  that  this  can  not  be  accounted  for.     What  entry  should  be  made? 

Monthly  Statements 

81.  A  Statement  is  a  copy  of  an  account,  including  dates  and  amounts,  as  it  appears  on 
the  Ledger. 

Statements  are  rendered  to  debtors  the  first  of  every  month.  This  is  done  to  insure 
prompt  remittances  and  to  enable  debtor  and  creditor  to  make  their  books  harmonize. 

82.  Taking  off  a  Statement.  First.  —  At  the  head  of  the  statement  write  the  date  on 
which  it  is' made  and  the  name  and  address  of  the  debtor. 

Second. — Copy  the  debits,  with  the  date  and  amount  of  each  entry,  writing  the  amounts 
in  the  first  money  column.  When  the  entry  is  from  the  Sales  Book,  write  the  abbreviation 
"  Mdse."  and  for  the  Cash  Book  the  word  "  Cash,"  but  when  it  is  from  the  Journal,  turn  to  the 
Journal  (if  the  explanation  is  not  in  the  Ledger)  and  obtain  the  explanation,  which  should  be 
worded  briefly  on  the  statement.  After  the  debits  have  been  taken  off  draw  a  line  and  add, 
writing  the  sum  in  the  second  money  column. 

Third.  — Proceed  to  copy  the  credits,  if  any,  first  writing  "  Cr."  in  the  middle  of  the  next 
line.  Write  the  credit  amounts  in  the  first  column  and  their  total  amount  in  the  second 
column.  Then  subtract  the  total  amount  of  the  credits  from  the  sum  of  the  debits,  which  will 
give  the  balance. 


BOOKS  FOR   BOOKKEEPING 


69 


Statement 


L.  L.  WILSON, 

JTew  Fork,  April  1,  1901. 

Rochester,  N.  Y. 

In  Account  tvith  E. 

H.   EARL  &   CO., 

1901 

Wholesale  Dry  Goods. 

March 
March 

2 
9 
15 

5 
9 

Mdse., 

i( 

Cr. 

Mdse.  ret'd, 
Cash, 

Balance, 

38 

75 

100 

50 
00 
00 

213 

38 

50 
50 

10 

28 

00 
50 

175 

00 

EXERCISE  19 


Render  statements  to  the  customers  of  John  Stewart  &  Co.  according  to  the  Ledger  which 
you  made  in  Exercise  15. 

83.  Statements  are  received  from  creditors  the  first  of  every  month,  and  should  be  checked 
as  soon  as  possible  after  receipt.  Each  month's  statements  are  generally  preserved  ;  all  may 
be  destroyed,  however,  except  the  final  month's  statements  and  any  previous  ones  whose 
accounts  are  in  dispute  and  unpaid. 

When  errors  are  discovered,  notify  the  creditor  so  as  to  enable  his  bookkeeper  to  have  the 
next  month's  statement  correct.     Keep  statements  checked  up  from  month  to  month. 

84.  Checking  a  Statement.  First.  —  Turn  to  the  Ledger  account  with  which  the  state- 
ment is  to  be  checked.  As  the  statement  is  one  from  another  firm,  the  debits  on  the  statement 
will  appear  as  credits  on  the  Ledger,  and  the  credits  on  the  statement  will  appear  as  debits  on 
the  Ledger. 

Second.  —  If  the  credit  side  of  the  account  gives  other  than  the  exact  dates  and  amounts 
of  the  debits  on  the  statement,  refer  to  the  Journal  entries  and  ascertain  the  dates  and  amounts 
according  to  the  invoices.  In  cases  of  agreement,  check  each  amount  by  using  a  check  on  the 
Ledger  and  statement,  thus:   "y/." 

Third.  —  Should  dates  and  amounts  be  discovered  on  the  statement  not  appearing  on  either 
the  Ledger  or  the  Journal,  insert  (in  pencil  or  red  ink)  on  the  statement,  opposite  the  amount 
or  amounts,  the  words  "  No  invoice." 

Fourth.  —  Should  the  date,  but  not  the  amount,  agree  with  the  Ledger,  ascertain  the  differ- 
ence. By  referring  to  the  invoice  see  if  the  correct  amount  was  entered  on  the  Journal  and 
posted  correctly.  When  convinced  that  the  invoice  is  correct,  and  also  the  amount  on  the 
Ledger,  insert  the  difference  in  pencil  on  the  statement  opposite  the  amount.  After  all 
debits  on  the  statement  have  been  checked  with  credits  on  the  Ledger,  proceed  to  check  the 
credits  with  the  debits  on  the  Ledger. 

Fifth.  —  Should  errors  be  discovered,  make  a  note  of  them  (in  pencil  or  red  ink)  on  the 


60 


BUSINESS  RECORD 


statement  directly  under  the  last  written  line,  and  deduct  or  add  as  the  case  may  require. 
After  the  statement  is  made  to  agree  with  the  Ledger,  mark  the  statement  "O.K."  and  sign 
your  initials. 

Statement 

c4^&w  Viybi,  THcuy  / ,  190/. 
To  m.  A  £awM  'if  &a.^  Dr. 


(Zjs.V'it 

/ 

Bayla/)te^&, 

138 

^0 

V 

/O 

mcUe.., 

/s 

00 

v/ 

/2 

'^        Overchg.  on  statemH,  7.00 

67 

60 

20 

/  / 

¥■3 

76 

V 

i*^ 

"        No  invoice, 

/3 

60 

s/ 

30 

:6 

76 

286 

^0 

CljllA.it 

8 

^a-^'k, 

38 

(^0 

V 

17 

//" 

60 

00 

• 

SS 

BcLta,ns^&, 

/66 

00 

^£^3 

qo 

^/ 

60 

Or. 

April 

12 

Overchg.  on  statem't, 

7 

00 

29 

JSfo  invoice, 
Balance, 

13 

50 

20 

60 

21 

00 

O.K. 

as. 

SECTION  II.    CLOSING  THE  BOOKS 

85.  Closing  the  Books  is  the  process  of  ascertaining  the  exact  condition  of  a  business. 

This  term,  "  Closing  the  Books,"  does  not  imply  that  they  are  literally  closed  not  to  be  re- 
opened, for  they  are  generally  continued  in  use.  Some  firms,  however,  procure  a  new  set,  or 
at  least  a  new  Ledger,  and  file  the  closed  Ledger  for  reference. 

86.  Why  Closed.  The  purpose  of  closing  the  books  is  to  determine,  at  stated  periods,  the 
financial  standing  of  the  firm,  also  its  net  loss,  or  net  gain,  and  the  present  worth.  This  is 
done  for  the  benefit  of  those  who  have  an  interest  in  the  business. 

The  books  of  a  business  are  closed  at  least  once  or  twice  a  year  ;  but  the  frequency  of 
closing  varies  with  different  firms.  It  is  customary  to  let  the  closing  of  the  books  date  from 
the  last  day  of  a  month,  although  circumstances  often  necessitate  closing  before  the  end  of  the 
month. 

87.  An  Inventory  is  a  written  account  of  all  goods  and  property  on  hand,  figured  at  cost  or 
present  value.     It  is  always  required  in  order  to  close  the  books  properl3^ 


CLOSING    THE   BOOKS 


61 


Inventory  Book 
Walker  &  Bennett,  January  1,  1901 


Inventory  of 

Mdse. 

4 

dozen  Brooms, 

@     $4.25 

17 

00 

138 

lb.  Prunes, 

@         .16 

22 

08 

65 

bars  Ivory  Soap, 

@         .03 

1 

95 

25 

bbls.  Flour, 

@       5.50 

137 

50 

15 

"      Apples, 
Inventory  of  Office 

@       4.50 
Farniture. 

67 

50 

246 

03 

3 

Desks, 

@  $25.00 

75 

00 

6 

Chairs, 

@       1.50 

9 

00 

3 

Chairs, 

@       2.50 

7 

50 

1 

Bookkeeper's  Desk, 

@     12.50 

12 

50 

1 

Stool, 

@       5.00 

5 

00 

109 

00 

355 

03 

EXERCISE  20 

Close  the  books  of  John  Stewart  &  Co.  according  to  the  following  method.  As  the  first 
two  steps  have  been  taken,  begin  now  at  the  third  one  and  insert  the  inventories  herewith 
appended : — 

John  Stewart  &  Co. 

Inventories. 

Merchandise  $4565.50 

Furniture  and  fixtures  67.50 


The  Books  —  How  Closed 

88.    Method  of  Closing.     First.  —  Take  an  inventory  of  all  property  and  goods  on  hand, 
such'  as  merchandise,  furniture  and  fixtures,  horses  and  wagons,  real  estate,  etc. 

Second.  —  See  that  all  the  ordinary  entries  for  the  month  have  been  made  and  posted. 
Then  take  off  a  trial  balance. 

Third.  — Transfer  the  balance  of  Sales  account,  by  Journal  entry,  to  Merchandise  account, 
thus :  — 

Sales 

Merchandise 

(Explanation.)     Being  the  total  sales  for  the ending 


Note.  —  This  entry  may  be  omitted,  if  desired,  as  it  is  becoming  obsolete.  By  omitting  it,  the  debit  side  of 
Loss  and  Gain  accoimt  will  be  made  to  show  the  "  Expenses  "  of  a  business,  including  the  cost  of  the  goods  sold, 
while  the  credit  side  will  show  the  "Earnings."  The  balance  of  Sales  (Earnings)  account  will  be  transferred  in 
the  "Gain  (Earning)  p]ntry,"  and  the  balance  of  Mdse.  (Cost)  account  in  the  "Loss  (Expense)  Entry  "shown 
in  the  fourth  step,  page  65.  When  this  method  is  used,  the  "Loss  and  Gain"  statement  should  be  called 
"  Expenses  and  Earnings." 

After  posting  the  above  entry  (see  illustration,  page  62),  insert  the  Inventories  in  the 
Ledger  in  red  ink.  Enter  the  Resource  Inventories  on  the  credit  side  of  their  accounts,* and 
the  Liability  Inventories,  if  any,  on  the  debit  side  of  their  accounts.  Add  these  accounts  again 
and  determine  their  balances. 

Note.  —  Liability  inventories  are  such  items  as  pay  roll  and  salaries  which  are  unpaid  and  not  credited  on 
tlie  Ledger  to  the  personal  accounts  of  the  individuals,  also  interest  due  on  notes  and  bonds  outstanding,  etc. 


62 


BUSINESS   RECORD 
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CLOSING    THE  BOOKS 
Ledger  —  Continued 


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BUSINESS  RECORD 
Ledger  —  Continued 


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Note.  —  The  inventories,  like  the  transferred  balances,  might  be  journalized ;  but  this  is  rarely  done.     If 
the  inventories  were  journalized,  the  entry  would  be  as  follows  :  — 

Sundries  Sundries 

Furniture  and  Fixtures 
Merchandise 

Etc.  Furniture  and  Fixtures 

Merchandise 
Etc. 
The  credit  side  of  such  an  entry  for  resource  inventories  is  posted  before  the  books  are  closed,  and  the  debit 
side  after  the  books  are  closed.     For  liability  inventories,  however,  the  debit  side  is  posted  before  and  the  credit 
side  after. 


CLOSING    THE   BOOKS  66 

Fourth.  —  Make  two  Journal  entries  for  the  Losses  and  Gains :  — 
First  entry :  — 

Loss  and  Gain  Sundries 

Being  the  total  losses  (or  expenses)  for  the ending 

This  entry  should  contain  all  balances  of  accounts  which  show  losses  (or  expenses). 

Second  entry :  — 

Sundries                                                            Loss  and  Gain 
Being  the  total  gains  (or  earnings)  for  the ending 

This  entry  should  contain  all  balances  of  accounts  which  show  gains  (or  earnings). 

Post  these  entries,  writing  in  the  explanation  column  of  each  account  whose  balance  has 
been  transferred  the  words  "  Loss  and  Gain,"  and  in  the  explanation  column  of  Loss  and  Gain 
account  the  names  of  the  accounts  whose  balances  have  been  transferred  (see  illustrations, 
pages  62,  63). 

Note.  —  Clieck  the  postings  of  the  above  entries  before  taking  the  next  step. 

Fifth.  —  Make  a  Journal  entry  transferring  the  balance  of  Loss  and  Gain  account  to  the 
proprietor's  Stock  account,  or  to  the  partners'  Stock  accounts,  according  to  the  contract,  as  the 
case  may  be. 

When  the  Loss  and  Gain  account  shows  a  gain,  the  entry  should  read  (in  the  case  of 
a  partnership) :  — 

Loss  and  Gain  Sundries 

Stock 

Stock 

Being  the  net  gain  for  the ending 

When  it  shows  a  loss,  the  entry  should  read  :  — 

Sundries  Loss  and  Gain 

Stock 

Stock 

Being  the  net  loss  for  the ending 

After  posting  the  foregoing  entry.  Loss  and  Gain  account  will  balance.  Post  each  amount 
separately  to  Loss  and  Gain  account,  and  post  to  each  partner's  Stock  account  with  the 
word  "Loss"  or  the  word  "Gain,"  whichever  the  business,  shows,  as  explanation.  Then  insert 
in  red  ink  in  each  partner's  Stock  account  his  balance  (present  worth).  Rule  and  bring  the 
balance  down  in  black  ink  to  the  opposite  side  (see  illustration,  page  62). 

Sixth. — Carefully  examine  the  Ledger  and  rule  off  every  account  that  balances.  Then 
bring  down  the  inventories  (using  black  ink)  to  the  opposite  side  in  each  account  and  write  in 
the  word  "  Inventory,"  dating  the  entry  the  day  following  the  closing  of  the  books. 

Seventh.  — Take  off  a  trial  balance,  called  "  Final  Trial  Balance,"  and  enter  every  account 
that  shows  a  balance,  including  the  inventories. 

89.  It  is  necessary  to  rule  off  only  the  accounts  that  balance.  Some  bookkeepers  rule 
every  account,  inserting  the  balance  in  red  ink  and  then  bringing  it  down  in  black  ink.  This 
would  answer  in  a  small  business,  but  not  in  a  large  one,  where  there  are  thousands  of 
accounts.  It  is  customary  to  balance  all  the  accounts  in  a  Ledger  only  when  a  new  Ledger  is 
to  be  opened. 


66 


BUSINESS  RECORD 


90.  During  the  closing  of  the  books  the  current  business  can  be  written  up  daily  (allow- 
ing certain  pages  in  the  Journal  for  the  final  entries)  with  the  exception  of  posting,  which 
should  not  be  done  until  after  the  books  have  been  closed,  unless  a  new  Ledger  has  been  pro- 
cured for  the  succeeding  year.  If  a  new  Ledger  has  been  procured,  the  posting  can  be  done 
daily,  allowing  space  in  such  accounts  as  may  have  balances  or  inventories  to  be  brought  for- 
•ward  from  the  old  Ledger  after  the  books  have  been  closed. 

Financial  and  Business  Statements 

91.  Resources  and  Liabilities.  —  The  statement  of  the  resources  and  liabilities  shows  the 
financial  standing  of  a  house.  It  is  a  copy  of  the  final  trial  balance,  except  that  the  resources 
(the  debits)  are  placed  all  together,  and  the  liabilities  (the  credits)  likewise,  leaving  the  stock 
accounts  to  be  entered  last. 

Resources  and  Liabilities 


W.  B.  Potter  &  Co.,  January  1,  1902 


Besonrces 


Liabilities 


— Resources c^ 

Cash 

on  hand, 

7247 

50 

Merchandise 

per  inventory, 

4785 

50 

Furniture  and  Fixtures 

per  inventory. 

475 

00 

Michigan  Central  R.R.  Stock 

per  inventory, 

1000 

00 

Wright  and  Lord, 

700 

00 

Miller  and  Brown, 

1350 

00 

John  H.  Curtiss  (expense), 

83 

75 

Bills  Payable, 

3500 

00 

E.  G.  Spencer  Co., 

200 

00 

W.  B.  Potter  Stock, 

1 

11941 

75 

15641 

75 

15641 



75 

Resources  and  Liabilities  —  Condensed  Form 


W.  B.  Potter  &  Co.,  January  1,  1902 


BesouTces         Liabilities 


— Resources 

Cash 

on  hand. 

7247 

50 

Merchandise 

per  inventory. 

4785 

50 

Furniture  and  Fixtures 

per  inventory. 

475 

00 

Michigan  Central  R.R,  Stock 

per  inventory, 

1000 

00 

Accounts  Receivable 

per  list, 
— Liabilities 

2133 

75 

Bills  Payable, 

3500 

00 

Accounts  Payable 

per  list, 

200 

00 

W.  B.  Potter  Stock, 

11941 

75 

15641 

75 

15641 

75 

INCIDENTAL   SUBJECTS 


67 


92.  Losses  and  Gains.  —  The  statement  of  the  losses  and  gains  is  the  business  statement. 
It  shows  all  the  losses  and  gains,  and  the  net  loss  or  gain,  during  a  certain  period.  It  should 
be  a  copy  of  the  Loss  and  Gain  account  in  the  Ledger,  except  that  it  is  given  a  slightly  differ- 
ent arrangement.     The  net  gain  or  net  loss  is  left  until  the  last,  and  is  entered  in  red  ink. 


Losses  and  Gains 


W.  B.  Potter  &  Co.,  January  1,  1902 


Losses 


Gains 


-Losses- 


Expense, 

Furniture  and  Fixtures, 

Traveling  Expense, 


Gains- 


Merchandise, 


Net    Gain,  (red  ink) 


1252 

25 

266 


19U 


3485 


50 
00 
25 


75 
50 


3485 


3485 


50 


50 


EXERCISE   21 

Make  from  your  accounts  statements  which  will  show  the  exact  condition  of  the  firm  of 
John  Stewart  &  Co. 

93.  The  Balance  Sheet  is  a  specially  ruled  sheet,  showing  the  exact  condition  of  a  business. 
It  consists  of  the  Trial  Balance,  Inventories,  Losses  and  Gains,  Resources  and  Liabilities  (Final 
Trial  Balance),  and  the  Stock  accounts,  arranged  in  separate  columns.  The  form  of  Balance 
Sheet  is  illustrated  on  page  68. 

Although  the  Financial  and  Business  Statements  are  employed  by  most  business  houses, 
some  firms  prefer  the  Balance  Sheet. 

EXERCISE   22 

Draw  off  a  balance  sheet  from  John  Stewart  &  Co.'s  books. 


SECTION  III.    INCIDENTAL  SUBJECTS 
Special  Books  of  Entry  Named  and  Defined 

94.  Among  the  Special  Books  of  Entry  are  the  City  Sales  Book,  Country  Sales  Book, 
Sales  (Order)  Blanks,  Sales  Journal,  Specially  Ruled  Cash  Book,  Credit  Journal,  Six- 
column  Journal,  Sales  Ledger,  Country  Ledger,  City  Ledger,  Purchase  Ledger,  and  General 
Ledger. 

Note.  —  In  some  business  houses  the  Check  Book,  Bill  Book,  and  Petty  Cash  Book  are  made  Books  of 
Original  Pantry  in  order  to  save  labor.  Any  auxiliary  book  may  be  made  a  Book  of  Original  Entry,  provided 
it  is  specially  ruled  for  that  pui'pose  —  that  is,  with  columns  to  explain  and  to  indicate  debits  and  credits,  and 
for  the  pages  of  the  Ledger  accounts  to  which  the  entries  are  posted. 

95.  The  City  Sales  Book  contains  a  record  of  the  sales  made  to  customers  in  the  city. 

96.  The  Country  Sales  Book  contains  a  record  of  the  sales  made  to  customers  out  of 
the  city. 


68 


BUSINESS  RECORD 


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INCIDENT  A  L    S  U  EJECTS 


69 


97.  The  Sales  (Order)  Blanks  are  used  by  many  large  houses  in  place  of  Sales  Book, 
Order   IJook,  and  Shipping  Book. 

Note.  —  Sales  Blanks  are  usually  printed  in  quadruplicate.  A  white  sheet  is  used  for  the  Sales  De- 
partment and  receives  the  extensions.  A  pink  sheet  is  used  for  the  Order  Department.  A  blue  sheet,  which 
some  houses  fill  out  to  take  the  place  of  an  invoice,  is  sent  to  the  consignee.  A  yellow  sheet  is  retained 
at  the  factory  or  works.  The  quadruplicate  form  necessitates  the  filling  out  of  only  one  form  by  the  writer, 
since  carbon  paper  is  used  between  the  sheets. 

Houses  which  employ  traveling  men  find  it  advantageous  to  use  these  blanks.  They 
are  printed  and  the  columns  ruled  to  suit  the  line  of  business.  The  traveling  men  are 
supplied  with  them  and  are  required  to  fill  them  out  properly  when  forwarding  orders. 
As  soon  as  the  orders  are  executed  the  items  are  checked  on  the  blanks,  which  are  returned 
to  the  office  and  filed  in  the  Binders  ^  of  the  different  traveling  men.  The  invoices  are 
then  rendered  and  the  amounts  on  the  blanks  posted.  When  the  orders  are  arranged  in 
this  manner  a  firm  can  readily  ascertain  each  man's  sales. 

At  the  beginning  of  each  month's  sales  several  ruled  sheets  should  be  placed   in    the 

binder,   headed   "  Sales   for  the  month "      These  should   be  filled  out  to   indicate 

the  number  and  amount  of  each  order  the  binder  holds  for  that  month,  and  on  them 
should  be  noted,  daily,  the  number  and  amount  of  each  order  shipped  and  posted.  At 
the  end  of  the  month  the  amounts  are  added  and  the  sum  is  posted  to  the  credit  of  Sales 
account. 

Wlien  using  this  form  care  must  be  taken  to  see  that  all  the  items  have  been  shipped. 
Where  any  have  been  omitted  they  should  be  transferred  to  a  new  blank,  marked  "  B.  O." 
(back  order). 

Sales  Blank 


Date  Sold 

fam..  ^/Of. 

H.  B.  Clay  & 

Company 

Folio 

3. 

o 

Our  Order  JVo.  f03. 
Their  Order  JVo.  387^. 

Salesman,  W- 

.  a.  a/. 

Terms 

Date  Billed 

30  claiM^. 

Sold  to   CI.  Id.  RUL&v  V  ^an. 

f(^^^.  2 Jo/. 

Shipped 

Town,  Ro&k  <J^ta,nct. 

State,  M. 

Ledger  Page 

fcLn..  2/0/. 

Ship  via  e.  R.  J.  V  S>.  R.  R. 

Remarks, 

26. 

Quantity 

Articles 

Price 

Salesmen  must  not  use  these 
columns 

5 

6-6-ta^.  S'ci'vA^&Q^6-tova  (S^tatov, 

@ 

^.00 

20 

00 

/ 

kkcL.  ??^o-ui^Oy&^,  fOO  qtxt. , 

@ 

.60 

60 

00 

o 

£6 

'^coito'  €'?ctva,  La-%cf&  ?}lcx^k,e^v&t, 

@ 

2.60 

62 

60 

20 

(m^  RU  ^af(&&,  £800  16^., 

@ 

.26 

728 

00 

860 

60 

98.  In  large  houses  the  binders  are  arranged  differently,  one  binder  being  used  for 
each  day's  business.  The  Sales  Blanks  are  then  journalized  in  a  Sales  Journal,  often  called 
"  Sales  Register,"  and  filed  for  reference. 

99.  The  Sales  Journal  contains  a  record  of  the  Sales  Blanks.  It  is  used  only  in  large 
houses. 

1  A  Binder  consists  of  two  heavy  pasteboard  covers  with  two  perpendicular  rods  at  one  end. 


70 


BUSINESS  RECORD 


100.  specially  Ruled  Cash  Book.  —  Large  houses  have  their  Cash  Books  ruled  to  suit  the 
business.  The  chief  difference  between  the  special  and  the  ordinary  Cash  Book  is  that  the 
former  has  more  columns  for  special  accounts,  whose  footings  are  posted  daily  or  monthly. 
This  is  done  to  save  work. 

For  the  general  principle  of  the  special  column,  review  pages  47-49.  In  the  Cash  Book 
illustrated  below,  however,  two  features  need  explanation. 

1.  The  Discount  column,  used  in  order  to  save  Journal  entries  of  discounts  allowed  on 
sales  and  purchases,  differs  from  the  other  special  columns  in  that  its  items  do  not  represent 
cash.  Therefore,  do  not  include  its  total  in  the  Cash  account  represented  by  the  General  or 
Sundries  column,  but  post  thus :  Post  the  total  amount  of  the  debit  side  to  the  debit  side  of 
Discount  account,  and  the  total  amount  of  the  credit  side,  if  any,  to  the  credit  side  of  Discount 
account.  And  when  posting  to  a  personal  account,  include  the  item  of  discount  (if  any)  in 
the  amount  posted  {e.g.  W.  D.  Ames  is  to  be  credited  with  $140.25). 

2.  When  more  than  one  Ledger  is  used,  there  are  generally  separate  columns  in  the  Cash 
Book  to  indicate  the  Ledger  to  which  each  amount  is  to  be  posted.  For  example,  the  Sales 
Ledger  column  contains  the  amounts  to  be  posted  daily  to  the  Sales  Ledger,  the  Purchase 
Ledger  column  those  for  the  Purchase  Ledger,  and  the  General  Ledger  columns  those  for 
the  General  Ledger.     (See  page  71  for  explanation  of  these  Ledgers.) 

The  different  Ledgers  may  be  treated  as  merely  so  many  divisions  of  one  Ledger  ;  or,  as 
is  usually  the  case,  the  General  Ledger  may  contain  an  account  to  represent  each  of  the  other 
Ledgers,  so  that  a  trial  balance  may  be  taken  from  the  General  Ledger  alone. 

The  account  representing  the  Sales  Ledger  is  called  Sales  Accounts.  The  debit  side  of 
this  account  is  the  same  as  the  sum  of  all  the  debits  in  the  Sales  Ledger,  and  the  credit  side  is 
the  same  as  the  sum  of  all  the  credits  in  the  Sales  Ledger.  Sales  Accounts  account  is  debited 
with  the  total  sales  shown  on  the  Sales  Book  (for  this  is  the  total  of  the  items  with  which  the 
customers'  accounts  in  the  Sales  Ledger  are  debited) ;  and  is  credited  with  the  total  settle- 


Dr. 


Specially  Ruled  Cash  Book  (Left-hand  Page) 
Cash 


Ledger 

Disconnt 

Cash  Sales 

Sales 

Qeneral 

1901 

Page 

Ledger 

Ledger 

Dec. 

30 
31 

Amounts  bro't   for 
W.  D.  Ames 
Chas.  Good 
R.  T.  Lord  &  Co. 
Bills  Receivable 
Cash  Sales 
J.  J.  Ward 
Monroe  &  Co. 
Cash  Sales 
Taylor  &  White 

Discount  Dr. 
Cash  Sales  Cr. 
(Sales  Accounts  Cr.) 
Cash  Dr. 

ward 
balance  acct. 
on  acct. 

invoice  of  11/30 
vv.  renn         (jis.    3.00 
per  Cash  Sales  Book 
on  acct. 
Nov.  acct. 

per  Cash  Sales  Book 
deposit  sight  dft. 

(Sales  Accounts  Cr.) 

total  receipts 

65 

2 

1 

75 
75 

20 

6755 

475 

750 

00 

50 
00 

35785 

137 

75 

66 

250 

67 

75 

50 
50 
00 
00 

00 
55 

00 

5675 
365 

7980 
36456 

23 

50 

I 

69 

70 

7980 

50 

50 

36456 

55 

55 

50477 

78 

INCIDENTAL   SUBJECTS 


71 


raents  by  customers  as  shown  on  the  Credit  Journal  and  the  Cash  Book  —  i.e.  with  the  totals 
of  the  Sales  Ledger  and  debit  Discount  columns,  these  entries  being  indicated  by  the  words  in 
parentheses  in  the  specimen  Cash  Book  on  page  70  (for  these  totals,  together  with  those  of 
the  Credit  Journal,  are  the  same  as  the  sum  of  the  items  with  which  the  customers'  accounts 
in  the  Sales  Ledger  are  credited).  In  a  similar  way  the  Purchase  Accounts  account  repre- 
sents the  Purchase  Ledger. 

Note.  —  When  a  firm  discounts  or  pays  bills  promptly  before  the  last  day  of  the  month,  the  amounts  may 
be  charged,  on  the  Cash  Book,  direct  to  the  representative  accounts,  provided  no  accounts  are  desired  with  the 
parties  from  whom  goods  are  bought,  and  great  care  is  exercised  to  avoid  paying  a  bill  twice. 

101.  The  Credit  Journal  is  used  for  journalizing  the  invoices  received,  also  for  all 
credits  to  customers  on  sales.  This  book  is  required  only  in  large  houses  where  there  are 
so  many  credits  daily  that  they  occupy  the  entire  attention  of  one  clerk. 

102.  The  Six-column  Journal  is  of  great  advantage  in  certain  lines  of  business.  It 
generally  takes  the  place  of  the  Sales  Book,  Cash  Book,  and  Journal.  This  makes  it  the 
only  Book  of  Original  Entry.  It  has  three  columns  at  the  left  for  debits,  and  three  at 
the  right  for  credits.  Similar  Journals  may  have  more  than  three  columns  on  each  side. 
From  the  illustration  on  page  72  explain  its  use. 

103.  The  Sales  Ledger  contains  the  accounts  of  all  customers.  Instead  of  one  Sales 
Ledger,  some  houses  have  two  —  the  Country  Ledger  and  the  City  Ledger. 

104.  The  Country  Ledger  contains  the  accounts  of  the  customers  located  out  of  the  city. 

105.  The  City  Ledger  contains  the  accounts  of  the  customers  in  the  city. 

106.  The  Purchase  Ledger  contains  the  accounts  of  houses  from  which  goods  are  purchased. 

107.  The  General  Ledger  contains  the  representative  accounts,  the  partners'  accounts,  and 
the  traveling  agents'  accounts  ;  also  the  purchase  accounts,  when  a  Purchase  Ledger  is  not 
used.  , 

Specially  Ruled  Cash  Book  (Right-hand  Page) 

23 

Cash  Cb. 


1901 

Ledger 
Page 

Discount 

Expense 

Fnrchase 
Ledger 

Oeneral 
Ledger 

Dec. 

30 

Amounts  bro't    for 

ward 

57 

50 

927 

50 

18965 

00 

7995 

05 

C.  R.  Cady 
Expense 
Expense 
Bills  Payable 
Discount 

bal.  acct.  to  Dec.  1 
500  2^  stamps 
2  boxes  of  pens 
C.  R.  Cady 
on  W.  Penn's  note 

7 

55 

10 
1 

00 
50 

375 

00 

600 
3 

00 
00 

31 

Rent 

Pay  Roll 

Mdse. 

Gas 

Stationery 

L.  Troy  &  Co. 

Discount  Cr. 

Expense  Dr. 

(Purchase  Accounts 

Cash  Cr. 

Dec.  rent 

per  Pay  Roll  Book 

Vance  &  Co.  in V.  12/26 

Dec.  Gas  bill 

Wells  &  Co.  inv.  12/5 

invoice  12/27 

(Purchase  Accts.  Dr.) 

Dr.) 

total  disbursements 

45 

75 

500 
950 

2 
10 

6 

939 
19385 

00 
00 
75 
75 
75 

65 

05 

939 

00 

00 

19385 

75 

75 

30393 

05 

» 

72 


BUSINESS  RECORD 


Six-column  Journal 
Chicago,  January,  1901. 


Mdse. 


94 


94 


42 


42 


Oasli 


75 


75 


00 


00 


Sundries 


37 


34 


94 

75 


243 


37 


50 


42 


71 


Ledger 


Debit 


Credit 


Bills  Receivable 

A.  C.  McKay 
Five  days'  sight  draft  accepted 
to  balance  acct. 

10  


Eastland  &  Son 

Mdse. 
25  lb.  Whitefish  returned 

@  10^  lb. 


Cash 


On  account 


B.  D.  White 


31 


Mdse. 


Sundries 
Eastland  &  Son 
Invoice  Jan.  2,     21.32 
''     8,     15.60 


C.  H.  Smith 


Invoice  Jan.  8. 


Eastland  &  Son 

Cash 
Balance  acct. 


Dr. 
Dr. 


Mdse. 
Cash 


Cr. 
Cr. 


Ledger 


Sundries 


37 


75 


36 


57 


37 


2 
34 


243 


00 


92 


50 


71 


Cash 


34 


34 


42 


42 


Mdse. 


50 


50 


Indexes 

108.  Each  Ledger  should  have  an  index,  giving  the  name  and  page  number  of  each 
account.  This  should  be  either  in  the  front  part  of  the  Ledger  or  in  a  separate  book  called 
"  Index  Book."  It  is  more  convenient  when  the  Ledgers  are  large  to  use  Index  Books,  as  they 
save  a  great  deal  of  time  when  posting.  (See  Posting,  page  54.)  The  indexing  of  accounts 
is  an  important  matter,  and  should  be  done  promptly ;  that  is,  the  name  of  each  new  account 
should  be  inserted  in  the  Index  immediately  after  the  account  is  opened  in  the  Ledger. 
Neglecting  to  index  accounts  often  causes  a  delay  in  posting,  and  serious  trouble  may  be 
caused  by  opening  two  or  more  accounts  of  the  same  name. 

Besides  the  Ledger  Indexes,  many  large  houses  have  special  Indexes  containing  the  names 
of  all  kinds  of  articles  likely  to  be  purchased  or  manufactured,  and  opposite  each  the  name  of 
the  representative  account  to  which  it  is  chargeable.  This  is  necessary  when  invoices  are 
O.K.'d  and  marked  in  different  departments.  , 


INCIDENTAL   SUBJECTS  73 

Partnership  Books  —  How  Opened 

109.  Ascertain  the  partners'  investments  from  the  contract,  and  make  the  entries  accord- 
ingly.    At  the  end  of  each  entry  write  the  words  "Investment  as  per  contract." 

When  a  partner  invests  the  resources  and  liabilities  of  an  old  business,  whereby  the  new 
concern  assumes  the  liabilities,  the  entry  on  the  Journal  should  be  as  follows  :  — 

Sundries  Sundries 

Debit  the  resources  and  credit  the  liabilities,  including  the  partner's  Stock  account. 

Single-entry  Bookkeeping 

110.  The  difference  between  Single-entry  and  Double-entry  bookkeeping  is  that  Single 
Entry  omits  the  representative  accounts. 

In  Single  Entry  only  personal  accounts  appear  on  the  Ledger.  As  with  these  accounts 
alone  it  is  impossible  to  ascertain  the  different  losses  and  gains  in  a  business.  Single  Entry  is 
not  practical.  Also,  errors  made  in  Single-entry  bookkeeping  are  often  not  detected  because 
a  trial  balance  can  not  be  taken  off  the  Ledger. 

111.  To  change  from  Single  Entry  to  Double  Entry.  First. — Take  an  inventory  of  all 
property  and  goods  on  hand,  placing  the  items  under  the  headings  of  representative  accounts. 

Second.  —  Prepare  a  statement  of  the  resources  and  liabilities.  The  resources  are  the 
inventories,  the  cash  on  hand,  the  notes  on  hand  (according  to  the  Bill  Book),  and  the  accounts 
(according  to  the  Ledger)  due  the  firm.  The  liabilities  are  the  notes  which  the  firm  has 
outstanding  (according  to  the  Bill  Book)  and  the  accounts  (according  to  the  Ledger)  which 
it  owes.  When  all  the  resources  and  liabilities  have  been  entered  on  the  statement,  draw  a 
line  and  add  each  column.  Write  the  balance,  as  the  proprietor's  stock  account,  on  the  state- 
ment and  add  again.     This  corresponds  to  making  a  final  trial  balance. 

Third.  —  Open  the  new  books  under  the  Double-entry  system  by  making  a  Journal  entry 
of  the  resources  and  liabilities,  thus  :  — 

Sundries  Sundries 

Debit  the  resources  and  credit  the  liabilities,  including  the  Stock  accounts. 

Fourth.  —  Close  the  personal  accounts  in  the  Single-entry  Ledger  by  inserting  in  red  ink, 
in  each  account,  the  date  of  the  transfer,  the  word  "  Balance  "  and  its  amount,  and  the  page  in 
the  new  Ledger  to  which  it  has  been  transferred. 

BUSINESS   OF  A  CAPITALIST  —  EXERCISES 

The  capitalist  is  C.  G.  Pillsbury  of  New  York  city.  His  books  have  been  kept  by  Single 
Entry  as  indicated  by  the  face  of  the  Ledger  shown  on  pages  74-77.  As  the  capitalist  realizes 
that  his  Ledger  does  not  show  what  his  estate  is  worth,  he  requests  his  bookkeeper  to  change 
the  set  to  Double  Entry.  Pages  74-79  show  the  face  of  the  Ledger,  Bill  Book,  Stock  Record, 
Bond  Record,  and  a  list  of  inventories  of  assets  that  are  not  on  the  Ledger. 

Books  required  :  Bill  Book,  Stock  Record,  Bond  Record,  two  Check  Books,  two  Deposit 
Books,  Sales  (Rent)  Book,  Journal,  Cash  Book,  Ledger.  The  Sales  Book  for  this  set  should 
be  called  "  Rent "  Book,  or  "  Rent  Sales  "  Book.  Thus  the  total  sales  would  be  credited  to 
either  Rent  account  or  Rent  Sales  account,  whichever  the  teacher  prefers. 

Rule  separate  sheets  for  the  Stock  Record,  Bond  Record,  and  Bill  Book  like  the  specimens 
on  pages  78,  79,  after  which  copy  on  these  sheets  and  in  your  books  the  contents  of  the 
capitalist's  books  as  shown  on  pages  74-79.  Then  begin  to  change  the  books  to  Double  Entry 
according  to  the  directions  given  above. 

Allow  for  each  account  in  the  Ledger  a  third  of  a  page. 


74 


BUSINESS  RECORD 


Representative  accounts  used :  Horses  and  Carriages,  Furniture  and  Bric-a-brac,  Library, 
Diamonds,  Stocks  and  Bonds,  Bills  Receivable,  La  Salle  Ave.  Apartment  Bldg.,  Madison  Ave. 
Residence,  Commonwealth  Ave.  Apartment  Bldg.,  Bills  Payable,  Suspense,  General  Expense, 
Charity,  Interest,  Insurance,  Discount,  Rent,  Dividend,  Mortgages  Receivable,  Commonwealth 
Ave.  Residence,  Commission,  Cash,  Loss  and  Gain. 

Note  to  the  Teacher.  —  Since  the  student  will  use  the  same  Ledger  after  the  books  have  been 
changed  to  Double  Entry,  the  old  accounts  in  the  Ledger  should  be  ruled  and  their  balances  inserted  in  red  ink 
but  not  brought  down,  because  the  balances  will  be  posted  from  the  Journal  entry  which  is  made  for  the  transfer. 
Consequently,  the  old  accounts  must  be  balanced  and  ruled  before  posting  the  Journal  entry. 

Ledger 
SECOND   NATIONAL   BANK  1 


1900 

190( 

3 

New   York 

Oct. 

1 

Balance, 

9500 

00 

Oct. 

31 

Checks  for  October, 

77 

15760 

00 

11 

31 

Deposits  for  October, 

77 

25000 

00 

Nov. 

30 

"        "    November, 

80 

20950 

00 

Nov. 

30 

"           "    November, 

80 

27850 

00 

Dec. 

31 

"        "    December, 

82 

25000 

00 

Dec. 

31 

"           "    December, 

82 

^0050 

92400 

00 

00 

61710 

00 

FIRST   NATIONAL   BANK 


1900 

1900 

Chicago 

Oct. 

1 

Balance, 

10000 

00 

Oct. 

31 

Checks  for  October, 

77 

5700 

00 

(( 

31 

Deposits  for  October, 

77 

9050 

00 

Nov. 

30 

"         "    November, 

80 

10800 

00 

Nov. 

30 

«          "  November, 

80 

6750 

00 

Dec. 

31 

"        "    December, 

82 

7800 

00 

Dec. 

31 

"           "   December, 

82 

12000 

37800 

00 

00 

■ 

24300 

00 

M.   D.   TUTTLE 


1900 


New  York 


Oct. 


Balance, 


750  00 


RYDER   &  -WHEELER 


1900 


Oct. 


1     Balance, 


2965  00 


BUSINESS   OF  A    CAPITALIST—  EXERCISES 


75 


Ledger  —  Continued 
C.    D.   BARON 


1900 


Philadelphia 


Oct. 


Balance, 


250  00 


C.    C.    PURDY 


1900 


1900 


New  York 


Oct. 

1 

Rent, 

75 

500  00 

Nov. 

15 

Cash, 

79 

300 

00 

Nov. 

1 

(I 

78 

500 

00 

Dec. 

15 

(( 

81 

600 

00 

Dec. 

1 

a 

81 

500 

1500 

00 

00 

900 

00 

M.    G.    'WILLIAMS 


1900 


1900 


ISfew  York 


Nov. 

1 

Interest, 

77 

265 

00 

Dec. 

30 

Cash, 

82 

265 

00 

Dec. 

15 

Loan, 

81 

1500 

1765 

00 

00 

i 

D.   D.    HEYWOOD 


1900 


1900 


Boston 


Oct. 

31 

Balance, 

200 

00 

Dec. 

15 

Cash^ 

81 

650 

00 

Nov. 

1 

Rent, 

78 

400 

00 

Dec. 

1 

u 

81 

400 

1000 

00 

00 

i 

W.   W.   ALLEN 


1900 


1900 


Cincinnati 


Nov. 

5 

Loan, 

79 

5000 

00 

Dec. 

24 

Cash, 

82 

7000 

00 

Dec. 

10 

(I 

81 

2500 

00 

« 

31 

Interest, 

82 

450 

7950 

00 

00 

' 

76 


BUSINESS  RECORD 


10 


Ledger  —  Continued 
J.   R.    CLARK 


1900 


Neio   York 


Oct. 


1      Balance, 


300  00 


C.   M.    COLLINS 


11 


1900 

1900 

Boston 

Oct. 

31 

Balance, 

800 

00  1 

Nov. 

15 

Cash, 

79 

650 

00 

Nov. 

1 

Kent, 

78 

125 

00 

Dec. 

1 

(( 

81 

125 

1050 

00 

00 

12 


H.    O.   STORM   <&   CO.,   Rent  Agents 


1900 

190C 

) 

Chicago 

Oct. 

31 

Rents  collected, 

77 

300 

00 

Oct. 

31 

Commission, 

77 

30 

00 

Nov. 

30 

((             ii 

80 

500 

00 

Nov. 

15 

Cash, 

79 

200 

00 

Dec. 

31 

t(                (e 

82 

500 

00 

(( 

30 

Commission, 

80 

50 

00 

1300 

00 

Dec. 

15 

Cash, 

81 

650 

00 

(( 

31 

Commission, 

82 

50 

980 

00 

00 

Estate  of  M.  M.   MORGAN 


13 


1900 


1900 


New   York 


Oct. 

31 

Attorney  fees, 

77 

700 

00 

Nov. 

30 

Repairs  on  Bldgs., 

80 

9050 

00 

Dec. 

31 

Attorney  fees, 

82 

300 

10050 

00 

00 

14 


ROUND   &   MASON,  Attorneys 


1900 


1900 


New   York 


Nov. 

15 

Cash, 

79 

1000 

00 

Oct. 

31 

Bill  for  services, 

77 

1600 

00 

Nov. 

30 

(I          u                u 

80 

270 

00 

Dec. 

31 

ii          il                 u 

82 

480 

00 

235000 

BUSINESS   OF  A    CAPITALIST—  EXERCISES 


77 


Ledger  —  Continued 
CRAWFORD   &   HILL,  Attorneys 


15 


1900 


1900 


Cldcago 


Nov. 

15 

Cash, 

79 

200 

00 

Nov. 

30 

Bill  for  services, 

80 

400 

00 

Dec. 

31 

((       a            u 

82 

690 

1090 

00 

00 

16 


INTERIOR   DECORATING   CO. 


1900 


1900 


New  York 


Dec. 

15 

Cash, 

81 

10000 

00 

Nov. 

30 

Bill  for  November, 

80 

15500 

00 

15 

Note, 

81 

5000 

15000 

00 

00 

Dec. 

31 

"      "    December, 

82 

5900 

21400 

00 

00 

Dr.  C.   C.  "WALKER 


17 


1900 


1900 


New  York 


Dec. 

15 

Cash, 

81 

50 

00 

Nov. 

30 

Bill  for  November, 

80 

45 

00 

Dec. 

31 

"      "   December, 

82 

55 

100 

00 

00 

18 

E.    R.    AUSTIN 

1900 

New   York 

Oct. 


Balance, 


250  00 


1900 


G.    M.   CHURCHILL 


1900 


Chicago 


19 


Dec.  15 


Balance, 


45 


00 


Dec. 


29 


Cash, 


82 


45 


00 


78 


BUSINESS  RECORD 


1 

II 

o    a> 

41 

Kg.  of 
Shares 
Trans- 
ferred 

n3 
S 

1 

m 

o 
+» 

•a 

1 

'•a 

1 

o  o  o  o.  o  o 
o  o  o  o  o  o 

o  o  o  o  o  o 

O   O   »0   lO   lO   o 
O  O  ^  05  c^  o 
lO   t-  Oi   T-l   ;d  o 

Purchase 

Value  per 

Share 

o  o  o  o  o  o 
o  o  o  o  o  o 

lO  o  o  o  o  o 
t-   O   lO   CO   lO   o 
t-   (M    CO    T-l    C^    <M 

o  o  o  o  o  o 
o  o  o  o  o  o 

o  o  o  o  o  o 
o  o  o  o  o  o 

tH    tH    iH    tH    tH    T-! 

Shares 
iueach 
Certifi- 
cate 

O  lO   t-  lO   »o   o 
(M    CO   Cq    tH    (M    O 

T-l 

o 

ta 
S 

o 
O 

s 
si 

d    cT 

r-H     °«     CQ       ce       >-,        r 

1  >^'  »  i  2  1 

c3       .     JH   .3   ^    '"3 

^  ^  '^  p  O  Pm 

No.  of 
Certifi- 
cate 

QO   lO    O    t-   O    CO 
CO   l^   CO  »o  iCi  o 

t-   lO   C5   C5   CO   o 
Oi    GO    Ci   CO    -^    1-- 

M 

ea 

a 

M 

tH 

rO 

>^ 

d 

^ 

3 

A4 

►-S 

iH 

5 

fl             2 

^ 

l« 

1           ^       ^ 

►3* 

P3           CO        k:. 

o        o 

o        o 

1 

o        o 

o       o 

1 

o       o 

lO         o 

iH           (N 

g 

o       o 

^ 

o       o 

o        o 

'c 

o       o 

K5           O 

g 

lH 

p 

c« 

<» 

rt              o         o 

o 

S                 CO           iM 

!z;( 

jq 

T-i        a 

iH            r-i 

a        Oi 

2 

tH            tH 

d 

^            rH 

>>            >> 

S              P 

^-5           l-S 

t» 

;h 

c3           ^ 

EH 

O           O 

1        '^ 

O 

O 

>> 

6        M 

o      ^• 

_e 

^       ? 

hH               <D 

g 

^                          •             -^ 

g 

l-H               g 

c; 

c3 

"S 

P^           ^ 

s 

eg              g 

!Z( 

1     <« 

ft      o 

iH            T-\ 

e 

P 

05  '^  05  '-;i 
00  ^  CO  ^ 

tH    l-S    tH    1-5 

lo        00 

iz; 

3    2 

BUSINESS   OF  A    CAPITALIST— EXERCISES 


79 


BILLS   RECEIVABLE 


DATE 

Maker  or  Indorser 

In  Whose  Favor 

Where  Payable 

Time 

When  Due 

Int. 
Bate 

Amount 

1897 

1899 

Dec. 

31 

C.  B.  Cobbs 

C.  G.  Pillsbury 

Chicago  Nat'l  Bank 

2  years 

Dec. 

31 

6% 

400 

00 

1900 

1901 

May 

5 

M.  A.  Watson  «&  Co. 

il                   u 

N.  Y.  Nat'l  Bank 

8  mos. 

Jan. 

5 

6% 

10000 

00 

June 

8 

A.  Sweet 

t(            (( 

u           a           <( 

8    " 

Feb. 
1902 

8 

6% 

4500 

00 

Jan. 

2 

E.  E.  Case 

U                  (I 

Chemical  Nat'l  Bank 

2  years 

Jan. 
1901 

2 

6% 

9000 

00 

Nov. 

10 

G.  L.  Wright 

i(                u 

Chicago  Nat'l  Bank 

60  days 

Jan. 

9 

5% 

5500 

00 

i( 

12 

M.  J.  Cooper 

((             i( 

a            (I           il 

2  mos. 

(( 

12 

6% 

5000 

00 

Dec. 

10 

Foster  West  Co. 

a              a 

New  York  Bank 

5  mos. 

May 

10 

6% 

5000 

00 

i( 

20 

Bradner  &  Co. 

u              u 

U                i(                (( 

6  mos. 

June 

20 

6% 

10000 

00 

49400 

00 

INVENTORIES 

Horses  and  Carriages  . 

Furniture  and  Bric-a-Brac 

Stocks  and  Bonds 

Diamonds     .         .         . 

Library 

Bills  Receivable  . 

La  Salle  Ave.  Apartment  Bldg.,  Chicago 

Madison  Ave.  Residence,  New  York    . 

Commonwealth  Ave.  Residence,  Boston 

Commonwealth  Ave.  Apartment  Bldg.,  Boston 

C.  G.  Pillsbury— Present  Worth 


^9000.00 
20000.00 
95150.00 
15000.00 
15000.00 
49400.00 
75000.00 
75000.00 
55000.00 

150000.00 

1558550.00 
1612735.00 


Capitalist's  Instructions  to  his  Bookkeeper 

January  1,  1901.  — "  To-day  being  the  first  day  of  the  new  year,  I  have  decided  to 
have  my  books  changed  from  Single  Entry  to  Double  Entry,  so  that  in  case  I  should  die 
my  executors  will  have  no  difficulty  in  ascertaining  the  exact  value  of  my  estate.  This 
sheet  contains  a  list  of  the  assets  that  are  not  on  my  Ledger  [see  inventories  above]. 
Let  me  have  a  trial  balance  of  the  Ledger  after  you  have  made  the  transfer  to  Double 
Entry." 

January  2.  — "  Have  you  finished  the  trial  balance  ?  Let  me  see  it ;  also  the  Bill 
Book.     You  may  charge  off  these  items  to  Suspense  account :  "  — 

M.  D.  Tuttle  to  balance  account,  %  750.00 

C.  D.  Baron    "        '<             "  250.00 

J.  R.  Clark     "        "              "  300.00 

E.  R.  Austin "        "             "  250.00 

%  1550.00 

Note.  —  Suspense  account  is  usually  opened  for  the  purpose  of  charging  off  such  personal  accounts,  interest, 
and  bills  receivable  as  are  long  past  due,  but  are  not  yet  considered  as  losses.  As  these  items  are  paid  or  settled, 
during  the  yeai',  the  amounts  are  credited  to  this  account.  And,  if  any  of  the  accounts  are  still  unpaid  at  the 
close  of  the  year,  their  balances  are  then  finally  transferred  to  Loss  and  Gain  account. 


80 


BUaiNESS  RECORD 


When  there  are  many  items  in  Suspense  account  it  is  customary  to  have  a  Suspense  Ledger,  which,  if 
desired,  may  be  used  as  an  Auxiliary  Book.  The  total  Imlance  of  this  Ledger  must  always  agree  with  the 
balance  of  the  Suspense  account  in  the  General  Ledger. 

"Where  is  the  Cash  account?  Then  balance  the  two  bank  accounts  and  open  a  Cash 
account  in  the  Ledger." 

Note.  —  On  the  Debit  side  of  the  Cash  Book  credit  the  accounts  of  the  banks  with  their  respective 
balances ;  use  for  explanation  the  words  "  For  balance  transferred  to  Cash  account."  When  the  Cash  account  is  kept 
in  the  Ledger,  post  only  once  a  month  the  total  amount  of  cash  received  and  the  total  amount  of  cash  paid  out. 

"  As  to  the  Check  Books,  I  wish  you  would  send  for  new  books  and  begin  with  the  balances 
as  shown  by  the  Ledger,  for  the  old  books  are  in  bad  shape,  as  I  have  not  filled  out  the 
stubs  for  a  great  many  of  the  checks  I  have  drawn. 

"Draw  checks  on  the  New  York  Bank,  for  Dr.  C.  C.  Walker,  $50;  Round  and  Mason, 
$1000;   Interior  Decorating  Co.,  $1400."     (See  page  95,  and  review  page  44.) 

"The  interest  on  Mr.  Case's  note  is  due  to-day.     Do  not  forget  to  charge  his  account." 

January  3.  —  "  To-day,  while  looking  over  my  private  papers,  I  found  several  items  that 
I  failed  to  include  in  the  inventory.     Here  is  a  list  of  them  :  "  — 

unexpired  premium  $  2765.00 

accumulated  on  notes 

and  bonds  to  Jan.  1.  2228.52 

Note  of  J.  D.  Lewis, 
dated  Dec.  22,  1900,  for 
3  mos.,  interest  at  6  %         4500.00 
$  9493.52 
Note.  —  Do  not  alter  any  of  the  old  entries,  but  make  only  new  entries  for  the  above  items. 

"  You  may  charge  off  to  Suspense  account  the  note  of  C.  B.  Cobbs,  $400,  and  interest  on 
same  to  Jan.  1,  $72.07." 

January  5.  — "  This  book  contains  the  names  of  my  tenants,  also  the  rate  of  rent. 
Charge  their  accounts  with  rent  on  the  first  day  of  every  month." 


Insurance 
Interest 

Bills  Receivable 


La  Salle  Ave.  apartment  building 
W.  B.  Brooks, 
C.  G.  Blake, 
G.  M.  Churchill, 
R.  S.  Mills, 

Madison  Ave.  residence :  — 
C.  C.  Purdy, 


TENANTS'    RENT   BOOK 
Chicago,  III. 

rent  ^ 


New   York,  N.T. 

rent 
Boston,  Mass. 


125.00  a  month 
125.00  "       " 
85.00  "       " 
75.00  '-       « 


$  500.00  a  month 


Commonwealth  Ave.  residence :  — 

D.  D.  Heywood,  rent 

Commonwealth  Ave.  apartment  building :  — 

C.  M.  Collins,  rent 

Mrs.  G.  E.  Coe, 

J.  J.  Loyd,  « 

M.  S.  Blake,  " 

R.  R.  Allen,  « 

J.  Kent  Wood,  « 

G.  B.  Townsend,  « 

Note.  —  Copy  the  foregoing  list  for  reference  in  making  entries  in  the  Rent  Sales  Book. 


$  400.00  a  month 

$  125.00  a  month 

110.00  "  " 

90.00  "  " 

90.'00  "  " 

85.00  "  " 

75.00  «  " 

75.00  "  " 


B  U  SIN  ESS   OF  A    CA  PITA  LIS  T  —  EXER  CISES 


81 


"These  checks  and  notes  came  in  this  morninjr's  mail:"  — 

C.  C.  Purdy, 

D.  D.  Heywood, 
C.  M.  Collins, 
Ryder  &  Wheeler, 
J.  R.  Clark, 


check  to  balance  acct.  to  Jan.  1, 
"     on  account 


^600.00 
400.00 
500.00 
965.00 
150.00 


Ryder  &  Wheeler's  note  for  f  2000  to  balance  account,  dated  January  2,  1901,  at  3  mos.,  with 
interest  at  7  %  per  annum. 

M.  D.  Tuttle's  note  for  $  750  to  balance  account,  dated  January  3,  1901,  at  4  mos.,  with  interest 
at  6  %  per  annum. 

January  7.  —  "  Draw  a  check  for  %  5000  on  the  Chicago  Bank  to  the  order  of  M.  D.  Tuttle, 
as  a  loan  on  his  residence.  This  is  the  mortgage,  dated  January  7,  payable  in  2  years  at 
7  %  interest.  The  interest  is  to  be  paid  annually.  I  wish  the  mortgages  kept  separate 
from  Bills  Receivable.     Therefore  open  an  account  called  'Mortgages  Receivable.' 

"You  may  open  the  mail." 

Check  from  Davenport  &  R.  I.  Ry.  Co.,  for  interest  on  bonds,  %  450 

"         "      Chicago  &  Milwaukee  El.  Ry.  Co.  "         "  "      "  500 

"         "      M.  A.  AVatson  &  Co.  to  balance  note  due  Jan.  5.  10,400 

January  8.  — "  Do  not  fail  to  deposit  to-day,  in  the  New  York  Bank,  all  the  checks 
you  have  in  the  safe.     Hereafter,  deposit  all  checks  the  day  they  are  received. 

"This  check,  $600,  is  from  H.  O.  Storm  &  Co.,  Chicago,  to  apply  on  rents  collected. 
From  their  statement  you  will  see  what  tenants  have  paid  in  January." 


Chicago,  January  5,  1901. 

C.   G.   PILLSBURY, 

New  York, 

^ 

In  Account  with  H.  0.  STORM  «&   CO. 

Statement  of  rents  collected. 

Jan. 

2 

W.  B.  Brooks,               January  rent. 

$125 

00 

2 

C.  G.  Blake  on  a/c,             "           " 

100 

00 

3 

G.  M.  Churchill,                  "           « 

85 

00 

3 

R.  S.  Mills  on  a/c,             "          " 

50 

00 

$360 

00 

Less  10  %  commission, 
Balance, 

36 

00 

$324 

00 

Note.  —  Journalize  the  foregoing  statement  in  the  Journal  by  making  two  entries.  In  one,  debit  H.  O.  Storm 
&  Co.  with  $360  and  credit  the  tenants,  thus :  — 

H.  O.  Storm  &  Co.  Sundries 

W.  B.  Brooks 
C.  G.  Blake,  etc. 
In  the  second  entry  debit  Commission  and  credit  H.  O.  Storm  &  Co.  with  f  36. 

January  9.  —  "  Give  me  a  check  to  the  order  of  currency,  for  $  200.  Charge  it  to  Charity 
account. 

"  G.  L.  Wright  of  Chicago  has  written  inclosing  check  for  $5045.84  and  a  new  note  for 
$500,  dated  January  7,  at  3  mos.,  with  interest  at  7^  per  annum,  to  balance  note  due  to-day. 


82 


BUSINESS  RECORD 


Delmonico, 
Devore  &  Son, 
J.  D.  Clark  &  Co. 
Taylor  &  Mason, 
Williams  &  Son, 


"  Deposit  all  Chicago  checks  in  the  Chicago  bank. 

"  Let  me  have  a  check  for  myself,  $275. 

*'  For  what  is  that  bank  notice  ?  —  My  note  for  $  5000  in  favor  of  the  Interior  Decorat- 
ing Co.,  dated  Dec.  15,  1900,  due  January  30,  1901.  I  forgot  all  about  that  note.  It  should 
have  been  in  the  inventory  as  a  liability;  however,  you  may  now  make  proper  entry." 

January  11. — "Mail  a  check  to  the  Waldorf-Astoria  in  payment  of  my  account  for 
December,  $  625.      Charge  this  to  my  personal  account. 

"  Draw  checks  for  these  bills.     Charge  the  first  two  to  my  account  and  the  others  to 

Charity  account :  "  — 

N.Y.,       bill  of  Jan.  1,  $125.00 

Chicago,       "      Dec.  24,  110.00 

N.Y.,            "      Jan.  5,  55.00 

N.Y.,           "      Dec.  23,  115.00 

N.Y.,           "      Dec.  23,  375.00 

"  Enter  this  note  of  M.  G.  Williams  to  balance  account,  dated  Jan.  9,  payable  in  60  days, 
$  1515.    The  interest  has  already  been  computed  at  6  ^  per  annum  and  added  to  the  principal." 
January  12.  —  "  What  is  the  balance  in  the  New  York  bank  ?  "     ($40,435.) 
"  Deposit  these  checks  in  the  New  York  bank.     They  are  for  dividends  on  shares  of 
stock :  "  — 

Standard  Oil  Co.,  check  for  $  3100.00 

N.Y.  N.H.  &  H.  R.R.  Co.,  "  150.00 

Diamond  Match  Co.,  "  117.00 

January  15.  —  "I  wish  to  discount  for  L.  L.  Wells  &  Co.  this  note,  dated  Jan.  2,  payable 
in  90  days,  signed  by  M.  D.  Stoddard,  Chicago,  $3750.  Charge  them  8^  discount  for  77  days. 
Draw  a  check  on  the  New  York  bank  for  the  proceeds,  and  let  me  have  it  immediately." 

January  18. — "Write  out  a  check  on  the  Chicago  bank  for  $5000,  to  the  order  of 
Ryder  &  Wheeler,  as  a  loan.  This  mortgage  is  from  Ryder  &  Wheeler  to  cover  the  loan 
made  on  their  factory,  $5000,  dated  Jan.  18,  payable  in  5  years  at  5%  interest.  The  interest 
is  payable  annually." 

January  19.  — "  H.  O.  Storm  &  Co.  write  that  they  have  rented  Apartment  '  C '  to 
M.  C.  Burry  for  $110  a  month.     The  rent  began  on  January  15." 

January  22.  —  "Ennis  &  Larmar  have  sold  15  shares  of  Diamond  Match  Co.'s  stock  at 
$140  a  share.  This  is  their  check,  $2097.82,  for  the  proceeds  as  shown  by  their  statement 
of  sale  :  "  — 


Ennis  &  Larmar                                                                ^^^^  York,  January  22,  1901. 
Stock  Brokers. 

STATEMENT    OF    SALE 

of   15  shares  —  Diamond  Match  Co. 

For    C.  G.  Pillsbury,  New  York. 

Received    January  17. 

1901                                                                Sold 

Jan. 

21 

15  Shares                                                                @  $  140 

Charges, 

Commission,           12^^  share 

1 

88 

2100 

00 

Revenue  Stamps,    2^       " 

Net  Proceeds 

30 

2 

18 

2097 

82 

BUSINESS   OF  A    CAPITALIST— EXERCISES  83 

January  25.  —  "  Enter  this  check  of  the  Royal  Insurance  Co.  for  insurance  on  my  horses 
and  carriages  which  were  destroyed  at  the  livery  stables  on  January  5,  $  7500." 

Note.  —  Credit  Insurance  account.  Then,  by  a  second  entry,  transfer  the  amount  from  Insurance  account 
to  Horses  and  Carriages  account,  to  show  that  the  loss  has  been  partly  repaid. 

January  29.  — "Let  me  have  a  check  for  myself,  $400. 

"  These  checks  came  in  the  mail  this  morning  :  "  — 

Mrs.  G.  E.  Coe,  check  for  January  rent,  $  110.00 

R.  R.  Allen,  "        "        "           "  85.00 

M.  S.  Blake,  "        "         "            "  90.00 

J.  Kent  Wood,  "        "        "           "  50.00 

G.  B.  Townsend,  "        "         "            "  75.00 

January  31.  —  "Bond  &  Burry,  N.Y.,  sold  my  Boston  residence  for  870,000,  charging 
5%  commission.     This  is  their  check  for  the  proceeds,  $66,500. 

"  Write  out  a  check  for  the  salaries  :  —  Stenographer,  $  75  a  month  ;  yourself,  %  150. 

"Did  you  draw  a  check,  to  the  order  of  the  bank,  for  my  note  due  yesterday?  You 
forgot  ?  Well,  no  doubt  the  bank  has  paid  the  note  and  charged  the  amount  to  my  account. 
You  will  find  the  '  charge '  ticket  for  this  among  the  returned  checks.  Now,  while  you  think 
of  it,  you  had  better  immediately  fill  out  a  stub  for  the  amount,  instead  of  waiting  until  the 
Debit  ticket  comes  in  with  the  returned  checks." 

Note.  —  Make  entries  for  the  invoices  received.  Take  off  trial  balance.  Render  a  monthly  statement  of 
the  trial  balance. 

Invoices  received  during  the  Month 

Chicago,  January  17,  1901. 
C.  G.  PiLLSBURY,  New  York. 

To  H.  0.  Storm  &  Co.,  Dr. 

For  repairs  in  La  Salle  Ave.  Apartment  Bldg., 

as  per  bills  attached,  %  965.00 


Boston,  Mass.,  January  12,  1901. 
C.  G.  PiLLSBURY,  New  York. 

To  N.  B.  Cook  &  Co. 

Por  interior  decorating  in  Commonwealth  Ave.  Apartment  Bldg., 

as  per  contract,  %  1800.00 


New  York,  January  31,  1901. 
C.  G.  PiLLSBURY,  New  York. 
In  account  with 

Delmonico. 
For  Restaurant  checks  for  the  month  of  January,  f  155.50 


New  York,  January  31,  1901. 
C.  G.  PiLLSBURY,  New  York. 
In  account  with 

The  Waldorf-Astoria. 

For  Room  rent  for  January,  $  300.00 

Restaurant  checks,  275.00 

Livery  and  extras,  135.50 

710.50 

New  York,  January  31,  1901. 
C.  G.  PiLLSBURY,  New  York. 

To  Round  &  Mason,  Attorneys,  Dr. 
For  professional  services  examining  contract  of  Moun  &  Wells,  $  50.00 

Suit  of  L.  D.  Mills  against  Estate  of  M.  M.  Morgan,  135.00 

185.00 


84 


BUSINESS  RECORD 


Executor's  Instructions  to  the  Bookkeeper 

February  4.  —  "Your  employer,  Mr.  C.  G.  Pillsbury,  died  in  an  accident  on  January  31. 
I,  as  his  executor,  desire  a  statement  of  his  assets  and  liabilities  at  close  of  business  January  31, 
1901."     The  inventories  are  as  follows  :  — 

Interest,  accumulated  on  Notes,  Bonds,  and  Mortgages       .         .  f  631.96 


Furniture  and  Bric-a-brac     . 
Library         .... 
Diamonds     .... 
Stocks  and  Bonds 
La  Salle  Ave.  Apartment  Bldg. 
Madison  Ave.  Residence 
Commonwealth  Ave.  Apartment  Bldg 
Insurance  Unexpired  Premium    . 


20000.00 
15000.00 
12750.00 
93200.00 
75000.00 
75000.00 
150000.00 
2260.00 


Note.  —  Transfer  the  balance  of  C.  G.  Pillsbury's  personal  account,  by  Journal  entry,  to  his  Stock  account. 


Deposit  Book 


1901 


Jan. 

1 

8 

12 

22 

25 

31 

(( 

31 

Feb. 

1 

C.  G.  PILLSBURY 

in  account  with 

SecontJ  ]Sratt0nal  28ank. 


Balance, 
Deposit, 


Vouchers  returned, 
Balance, 


New  York. 


30690 

13965 

3367 

2097 

7500 

66910 


124529 
9845 


114684 


00 
00 
00 

82 
00 
00 


82 
00 


82 


Vouchei'  Slip' 

50 

00 

1 

000 

00 

200 

00 

625 

00 

125 

00 

v^> 

275 

00 

\«?^ 
\./ 

1 

400 

00 

^<^. 

115 

00 

3 

790 

00 

O  |i 

375 

00 

O   CO 

55 

00 

e  S^  • 

'«.«'? 

400 

00 

;a  1;^ 

225 

00 

•2  S  5» 

5 

000 

00 

■^  •<  s 

«  i  1 

9 

845 

00 

<  «»  a, 

O 

Charge, 


SeconD  National  23anft 

Jfew  York,  fomAOa^l/lf  SO,  190/ . 


6000 


00 


1  Banks  having  counting  machines  send  a  voucher  slip  when  returning  the  checks  which  have  been  cashed. 
January  5/.  — Check  ^11,  $3685.83,  is  still  out. 


PART   III.     BUSINESS   FORMS 


SECTION  I.     THE  FORMS -THEIR  USE 


112.     Among  the  forms  used  in  business  are  :  — 

Bill, 

Invoice, 

Debit  Memorandum, 

Credit  Memorandum, 

Draft, 

Bill  of  Exchange, 

Note, 

Check, 

Certificate  of  Deposit, 

Money  Order, 

Receipt, 

Voucher, 

Statement, 

Account  Sales, 


Bond, 

Stock  Certificate, 
Express  C.O.D.  Envelope, 
Freight  Bill, 
Freight  Receipt, 
Bill  of  Lading, 
Notice  of  Overdraft, 
Notice  of  Note  or  Draft, 
Protest  for  Non-payment, 
Notice  of  Protest, 
Power  of  Attorney, 
Letter  of  Credit, 
Bill  of  Sale, 
Assignment. 


,  -  Bills  and  Invoices 

113.    A  Bill  is  a  written  account  of  services  rendered,  or  charges  made,  prefaced  with  the 
words     " To ..^^i fl™l .  Dr. " 

BUI 


Chicago,   hmtm^lybv  2J,   190/ . 

To  REND  &  PIERCE,   Dr. 

Attorneys  at  Law. 


SO 
/O 


00 
00 
00 


66 


00 


85 


86 


BUSINESS  FORMS 


114.  An  Invoice  is  a  written  account  of  merchandise  sold,  prefaced  with  the  words 
" Bought  of  .(the Arm) _  "  or  "  -it^sA™!.  Sold  to " 

115.  Invoices  and  bills  are  rendered  daily  from  the  Sales  Book  (or  a  similar  book)  to  the 
customers,  and  are  supposed  to  be  exact  copies  of  what  appear  in  the  Sales  Book. 

The  bills  and  invoices  received  during  the  month  are  not  journalized  until  the '  last  day 
of  the  month  (unless  they  are  discounted),  when  they  are  credited  to  the  accounts  of  the 
proper  persons  and  companies  by  Journal  entries,  having  for  explanation  the  word  "  Invoice," 
with  the  date  and  amount.  In  large  houses  a  Credit  Journal  is  used  so  that  the  invoices  are 
journalized  daily. 

Each  bill  and  invoice  should  be  O.K.'d  as  to  the  price,  the  extension,  etc.,  before  being 
journalized,  and  the  name  of  the  account  to  which  the  amount  is  to  be  charged  (debited)  should 
be  marked  on  it. 

Note.  —  A  rubber  stamp  is  generally  used  for  marking  on  the  bills  and  invoices  a  blank  form  containing 
lines  for  the  date  when  the  goods  were  received,  the  signatures  of  the  persons  who  O.  K.  the  price  and  the  extension, 
the  name  of  the  account  to  be  charged,  and  the  page  of  the  Journal  containing  the  entry. 

Many  houses  prefer  to  paste  the  bills  and  invoices  in  the  Invoice  Book,  and  post  direct 
from  there,  instead  of  making  Journal  entries,  but  this  practice  is  not  advisable. 

Invoice 


Chicago,   ja/yiiLCivy  /^,   190/ . 

Bouglit  of  H.   B.    CLAY  &    CO.  4 


/OO 
3 


6-ooce^  &v&a.'y>v  (^k&e^e^,  6000  lA.  @  /6^ 
hMU.  W-.  (g.  ^u(^,  9^0  60..       @    5^ 


800 


00 
50 


8^<? 


SO 


EXERCISE  23 
Mail  invoices  to  the  following  customers,  whose  goods  have  been  shipped:  — 

January  2 
C.  B.  Frost  &  Co., 

Order  #787  Springfield,  111. 

10  bbls.  Pillsbury  Flour  @         $4.00 

3  bbls.  Granulated  Sugar,  975  lb.  @  .05 

A.  B.  Rider  &  Son, 
Order  #3875  Rock  Island,  111. 

5  bbls.  Pillsbury  Flour  @         $4.00 

1  hhd.  Molasses,  100  gal.  @  .50 

25  pails  Extra  Large  Mackerel  @  2.50 


DEBIT  AND   CREDIT  MEMORANDA 


87 


G.  M.  Williams  &  Co., 
Order  #75  St.  Louis,  Mo. 

3  casks  Turkish  Prunes,  4500  lb.  @        $   .09 

Less  10^ 

January  3 
G.  M.  Williams  &  Co., 
Order  #87  St.  Louis,  Mo. 

200  bbls.  Flour  @         $5.50 

Shipped  to  C.  K.  Smith, 

Kansas  City,  Mo. 

January  21 
Carter  &  Brown, 
Order  #9658  Springfield,  111. 

3  bbls.  Currants,  each  250  lb.  @         8   .23 

Less  15^ 

C.  B.  Frost  &  Co., 
Order  #799  Springfield,  111. 

5  bbls.  Parkesburg  Flour  @         |4.00 

Febi'uary  1 
G.  M.  Williams  &  Co., 
Order  #100  St.  Louis,  Mo. 

2  chests  Oolong  Tea,  each  40  lb.  @         $   .47 

20  bbls.  Apples  @  5.00 

Shipped  to  Benjamin  Ellis, 

Springfield,  Mo. 


Debit  and  Credit  Memoranda 

116.    A  Debit  Memorandum  is  a  special  form  of  bill,  naming  a  charge  to  be  made.     It 
usually  requires  a  Journal  entry. 

When  a  debit  memorandum  is  rendered,  the  amount  is  debited  in  the  account  of   the 
firm  mentioned  therein. 

Debit  Memorandum 


H.  B.  CLAY  ^   CO. 
Debit  Memorandum.                                                       Chicago,   Sth-l/iO'ZVU  fd,   190/. 

Mame,  d.  S.  RicU.'b  If  of(yyi. 

(Jnt&veoX  cyyv  ^/OO  ^cyo  30  day^  at  7% 

f 

08 

88 


BUSINESS  FORMS 


117.  A  Credit  Memorandum  is  in  form  like  a  debit  memorandum,  but  has  the  words  "  Credit 
Memorandum "  marked  or  printed  on  it,  generally  in  red  ink.  It  is  usually  sent  to  a 
debtor,  informing  him  that  his  account  has  been  credited  with  the  amount  mentioned. 

A  credit  memorandum  is  rendered  when  allowing  credit  for  an  overcharge,  shortage, 
error  in  invoice,  returned  merchandise,  etc. 

Credit  Memorandum 


H.  B.  CLAY  ^   CO. 
Credit  Memorandum.                                                    Chicago,     ^d'TbilCi'blf  fO,   190/. 

200  t{)-.                                                                           @      ^/^ 

1 

W 

00 

EXERCISE   24 

Mail  credit  memoranda  to  the  following  firms :  — 

February  13 

G.  M.  Williams  &  Co.,  St.  Louis,  Mo., 

5  bbls.  flour  returned  as  defective         '  @     §  5.50 

C.  B.  Frost  &  Co.,  Springfield,  111., 

975  lb.  granulated  sugar  @  .01 

Overcharge  on  invoice  January  2. 

Carter  &  Brown,  Springfield,  111., 

150  lb.  currants  @  .23 

Shortage  on  invoice  January  3. 


Drafts  and  Bills  of  Exchange 

118.  A  Draft  is  an  order  on  a  person  or  persons  to  pay  to  a  third  party  a  certain  sum  of 
money. 

119.  A  draft  contains  the  names  of  three  persons :  — 

1.  The  Payee  is  the  person  who  is  to  receive  payment. 

2.  The  Drawee  is  the  person  who  is  ordered  to  make  payment. 

3.  The  Drawer  is  the  person  who  issues  the  order. 

In  the  illustration  at  the  top  of  the  next  page,  Students'  National  Bank  is  the  payee, 
A.  M.  Scott  the  drawee,  and  E.  H.  Earl  &  Co.  the  drawer. 

120.  There  are  in  general  use  three  kinds  of  drafts,  —  Sight,  Time,  and  Bank  drafts. 

121.  A  Sight  Draft  is  used  in  making  collections  and  is  payable  upon  presentation. 

If  the  drawee  dishonors  a  sight  draft,  that  is,  refuses  to  pay  it,  he  states  his  reason  to  the 
payee  or  his  agent,  who  writes  it  on  the  back  of  the  draft.    The  draft  is  returned  to  the  drawer. 

In  certain  lines  of  business  sight  drafts  are  drawn  every  month  on  country  customers 
whose  accounts  are  past  due.     They  are  usually  notified  in  advance,  by  letter  or  statement. 


DRAFTS  AND  BILLS   OF  EXCHANGE  89 

Sight  Draft 


$25^  Chicago,  myrvbuo/UM  q,  /qo/. 

UJL  JUyCjyAZ     Pay  to  the  Order  of 

StoL/djonJj)  TbaJjycrruxZ  IScunA 


15 

100    ^ — - — ^ ^^ — ^^ — ^ Dollars 


Value  received  and  charge  to  account  of 

To  a.rn.Soon         .    i 

m.  U/AjixiXarv.  JU.\  e.M  SoaJ  2^. 


122.  A  Time  Draft  is  one  payable  a  number  of  days  after  sight,  or  after  date.  It  is  of  no 
value  until  accepted  by  the  drawee,  who  writes  across  the  face  "  Accepted,"  the  date  on  which 
it  is  accepted,  where  payable,  and  his  own  (drawee's)  name.  Thus  the  draft  becomes  a  Bill 
Receivable  in  the  accounts  of  the  payee,  and  a  Bill  Payable  in  the  accounts  of  the  drawee,  and 
is  recorded  and  entered  the  same  as  a  note. 

If  the  drawee  dishonors  a  time  draft  by  refusing  to  accept  it,  the  procedure  is  the  same  as 
with  a  dishonored  sight  draft. 

Time  drafts,  like  sight  drafts,  are  used  in  making  collections. 

123.  The  Day  of  Maturity  of  time  drafts  is  computed  as  follows  :  — 

1.  On  an  After  Date  time  draft,  from  the  date  of  the  draft. 

2.  On  an  After  Sight  time  draft,  from  the  date  it  was  accepted. 


"After  Date 

"  Time  Draft 

$75.00 

New 

York,  February  1, 

1901. 

Thirty 

days 

after 

date, 

pay 

to   the    order 

of 

Brown, 

Jacksor 

I   &   Co. 

Seventy- 

-five^.^,^.^^ 

no 

Dollars. 

Value  received  and 

charg 

3  to  account  of 

M.  D.  Martin, 
No.  5          Chicago, 

111.) 

H.  W. 

West 

&  Co. 

After  Sight"  Time  Draft 


$150.00 

Boston, 

January  3,  1901. 

At    five    days' 

sight    pay 

to 

the 

order 

of    Students' 

National    Bank 

One  hundred  and  fiftv^^ 

^.^^flJ  Dollars. 

Value  received  and  charge 

to 

account  of 

To  D.  C. 

No.  25 

Perry  &  Co., 

Chicago,  111 

.} 

H. 

W. 

West  &  Co. 

90  BUSINESS  FORMS 

124.  A  sight  draft  or  either  kind  of  a  time  draft  may  be  drawn  in  favor  of  the  drawer. 
In  this  case  only  two  names  appear  on  the  draft  instead  of  three ;  for  the  name  of  the  payee  is 
replaced  by  "  myself  "  or  "  ourselves,"  or  is  the  same  as  the  name  of  the  drawer. 

Draft  payable  to  Drawer 


$150.00 

Boston, 

January  3, 

1901. 

At  five  days' 

sight 

pay  to  the 

order 

of  Ourselves 

One  hundred  and  fiftv 

no 

Dollars. 

Value  received  and 

charge  to  account  of 

'■^-'^■^-  lOfl 

To  D.  C. 
No.  50. 

Perry  &  Co., 
Chicago, 

.„.} 

H. 

W. 

West 

&  Co. 

Note.  —  When  a  draft  is  drawn  to  the  order  of  "myself,"  or  "ourselves,"  it  must  be  indorsed  in  blank  or  in 
full  (page  108)  by  the  drawer  before  it  can  be  collected  by  a  third  party.  It  is  usual  to  place  all  drafts  in  the 
hands  of  a  bank  for  collection. 

Note.  —  When  a  draft  is  paid  or  returned,  it  should  be  checked  off  on  the  Draft  Book  by  writing  across  the 
stub  the  word  "  paid  "  or  "  returned,"  as  the  case  may  be,  together  with  the  date.  A  returned  draft  is  usually  filed 
for  reference. 

EXERCISE   25 

Draw  the  drafts  and  make  Journal  entries,  on  Journal  paper,  for  the  following  trans- 
actions and  mention  the  books  which  should  receive  the  entries.  The  date  should  be  written 
in  full  —  month,  day,  and  year. 

1.  John  G.  Clark,  of  St.  Louis,  owes  C.  M.  Rogers  &  Co.,  of  Chicago,  a  balance  of  $175. 
Draw  a  sight  draft  for  the  amount  to  the  order  of  the  St.  Louis  Students'  Bank. 
What  should  be  the  entries  on  the  books  of  C.  M.   Rogers  &  Co.  if  the  draft  is  paid 

and  a  check  received  for  the  proceeds,  $174.25? 

What  should  be  done  in  case  the  draft  is  returned  with  a  note  on  the  back,  thus : 
"Will  write,"  etc.? 

2.  Bought  of  M.  B.  Stewart  &  Co.,  New  York,  on  account,  bill  of  goods  at  $95. 
Make  the  draft  which  M.   B.   Stewart  &  Co.   might  draw  for  this  amount;  make  it  a 

time  draft  payable  ten  days  after  date,  to  the  order  of  M.   G.  White  &  Co.     Accept  the 
draft. 

What  should  be  the  entry  on  your  books  ?  What  entry  should  you  make  when  you 
pay  the  draft?  What  entry  was  made  on  the  books  of  M.  G.  White  &  Co.  when  you 
accepted  the  draft  ? 

3.  A.  C.  McKay,  of  Chicago,  stays  at  the  Fifth  Avenue  Hotel  while  in  New  York 
city.  His  bill  is  $75.  Instead  of  paying  it  by  check,  he  asks  the  manager  to  draw  a 
draft  on  him  for  the  amount  at  five  days'  sight,  agreeing  to  accept  it  at  once. 

Draw  the  draft  to  the  order  of  the  New  York  National  Bank.  Accept  the  draft  for 
the  drawee. 

What  should  be  the  entry  on  the  books  of  the  hotel? 

EXERCISE  26 

Draw  drafts  on  the  following  firms,  dated  to-day :  — 

A  sight  draft  for  $200  on  G.  M.  Williams,  St.  Louis,  Mo.,  to  the  order  of  the  St.  Louis 
National  Bank. 

A  five  days'  sight  draft  for  $58.75  on  C.  B.  Frost  &  Co.,  Springfield,  111.,  to  the  order 
of  the  Chicago  National  Bank.     Accept  the  draft  for  C.  B.  Frost  &  Co. 


DRAFTS  AND  BILLS   OF  EXCHANGE 


91 


A  time  draft  for  $100  on  Carter  &  Brown,  Springfield,  111.,  to  the  order  of  the 
Students'  National  Bank,  payable  30  days  after  date. 

A  one  day's  sight  draft  for  $Q6  on  A.  B.  Rider  »&  Son,  Rock  Island,  111.,  to  the  order 
of  W.  A.  Brown. 

125.  A  Bank  Draft  is  an  order  made  by  one  bank  on  another,  requesting  the  payment 
of  a  sum  of  money  to  the  person  whose  name  is  mentioned,  or  to  his  order.  These  drafts 
are  used  in  making  remittances  and  are  treated  as  cash. 

A  bank  draft  may  be  purchased  at  any  bank  for  a  small  charge,  according  to  current 
rate,  called  exchange. 

Bank  Draft 


Cbtcago  mational  BanFi  -^o.  9075. 

Chicago,  ff/fOA^lL  26,   190/ . 


OF    CHICAGO 


Pay  to  the  Order  of 


jCmvui'  /iaa^'b  2^  ^. 


To  S'iA.ot^  JrcutlanoL  Sd'n^, 
7 


$60.00 

^^  J  Dollars 
Cashier. 


126.   Bill  of  Exchange  is  another  name  for  draft.     Bills  of  exchange  are  of  two  kinds  :  — 

1.  A  foreign  bill  of  exchange  is  a  draft,  used  mostly  by  banks,  drawn  on  a  bank  in  a 
foreign  country.  It  is  usually  drawn  in  triplicate,  numbered  1,  2,  and  3.  This  is  done  in 
order  that  if  one  or  two  are  lost  another  may  be  substituted.  As  soon  as  one  is  paid 
the  others  become  worthless. 

2.  An  inland  bill  of  exchange  is  a  draft  drawn  on  a  bank  in  the  same  country  as  the 
drawer. 

Foreign  Bill  of  Exchange 


Exchange  for 
£500, 


Exchang6{Second  of  same  tenor 

Value  rec6iv6diA;}\ich  pi 

To  JCxyod  2^  ISaZjLd, 

cCorocUrrv. 


days  after  Sight  of  this  First  of 
and  Gate  itiupaid)pay  to  the  order  of 


CMcago,  ClpAx/  25,/qO/. 


ace  to  account  of 


C.U.UaJijUd1/-Co. 


92  BUSINESS  FORMS 

Notes 

127.    A  Note,  or  "promissory  note,"  is  a  written  promise  to  pay.     It  is  usually  a  promise 
to  pay  a  certain  sum  of  money  to  a  specified  person,  or  to  his  order. 
A  note  usually  contains  the  names  of  two  parties : 

1.  The  Payee  is  the  person  to  whom  the  note  is  made  payable.     The  payee   must  be 
named  in  the  note,  unless  it  is  payable  to  bearer. 

2.  The  Maker  is  the  one  who  signs  it  and  promises  to  pay.     In  the  illustration  given 

A.  Hummer  &  Co.  are  the  makers. 

Note 


/  92  6. 3/                                                     Chicago ,  ^^JjrVUMAJJ^  3,  /qOI. 
^^lyyjJJ-  cix2ML6     after  date    LAM^     promise  to  pay 
to  the  Order  of     jkyA/TU  Jultln^O-fvn^  2^  QyO. 
Tbinnjb  iujjTvdjUj£  tuM^nJjU-2U/)C  CUnOycL  ^'//oo Dollars 

aX  tAji  Stuudjbn^htd  fZaiujruz/  13cLrnA. 

Value  received  with  interest  at  O/o  per  annum. 

Ci,y<AjnnruT)nMb^V-&j, 


128.  The  Face  of  a  Note  is  the  amount  named  which  the  maker  promises  to  pay.  In  the 
above  illustration  $926.31  is  tlie  face  of  the  note. 

129.  Days  of  Grace  are  a  period  of  three  days  which  in  some  states  is  added  to  the  time 
specified  in  a  note.  In  tliese  states  a  note  is  due  three  days  after  the  specified  time;  but  in 
those  states  which  have  abolished  days  of  grace  a  note  is  due  at  the  time  stated  in  the  note. 

130.  A  Demand  Note  is  due  and  payable  on  presentation,  without  days  of  grace. 

Demand  Note 


$350.00  Chicago,  March  14,  1901. 

On  demand,  after  date,  we  promise  to  pay  to  the  order  of 

George  Curtis  White 

Three  hundred  and  fifty  .^^..^-v.^n^^.-^.^-^.x-s^^^^.'^x^.-v.^v.--^./-^^  ^  Dollars, 

at  the  Students'  National  Bank. 

Value  received. 

A.   HUMMER  &   CO. 


(For  indorsement  of  notes  see  page  108.) 

131.  A  Judgment  Note  bears  upon  its  face  a  power  of  attorney  authorizing  the  payee,  or 
some  other  person  named,  to  confess  judgment  in  a  court  of  record  for  the  face  of  the  note,  plus 
interest,  and  for  a  certain  sum  for  attorney's  fees,  in  case  of  non-payment. 


NOTES  93 

Judgment  Note 


$30.00  .  Rochester,  N.Y.,  April  1,  1901. 

Ninety  days  after  date,  for  value  received,  I  promise  to  pay  to  the  order  of 
J.  Benjamin  Newell  ^x.^x^-s^^^>...x^-.,--.,-^^^'n,^~.^^^-sv-v^-s^^.^^-^v^^^ 

Thirty ^  ^  Dollars, 

at  Students'  National  Bank  .^,-^^'^..,-,^^~^---..^'-^..^^^.,^-^.^^^^^~.^^^^^^  with  interest 

at  6  per  cent  per  annum  after  June  30  until  paid. 

And  to  secure  the  payment  of  said  amount  /hereby  authorize  irrevocably,  any  attorney  of  any  Court 
of  Record  to  appear  for  me  in  such  Court,  in  term  time  or  vacation,  at  any  time  hereafter,  and  confess  judg- 
ment without  process  in  favor  of  the  holder  of  this  Note  for  such  amount  as  may  ajipear  to  be  unpaid  thereon, 
together  with  costs,  and  ~s..'n„  dollars  attorney's  fees,  and  to  waive  and  release  all  errors  which  may  intervene 
in  any  such  proceedings,  and  consent  to  immediate  execution  upon  such  judgment,  hereby  ratifying  and  con- 
firming all  that  my  said  attorney  may  do  by  virtue  hereof. 

No.  2  WM.   WHITE. 


132.  A  Joint  Note  is  one  signed  by  two  or  more  persons,  who  need  not  necessarily  be  part- 
ners. If  the  note  is  made  joint  and  several^  each  and  every  signer  is  responsible  to  the  payee 
for  the  payment  of  the  entire  amount  in  case  of  default  by  the  makers. 

Joint  and  Several  Note 


$500.00 

San  Francisco,  June  15,  1901. 

Two    months    after 

date. 

we    severally   and    jointly   promise    to    pay    to   the 

order  of  Burton  M.  Flower. 
Five  hundred^^,^-^/^^..^.,^^,.^^.^,^^^^ 

.^.^^■.^..^^^.^.^■.^.^..^.^.^^^-.^-^.^-.^^^.^.^.^.^.^.^.^  f^  Dollars, 

at  the  San  Francisco  Bank. 

Value  received. 

D.  R.  YORK. 
GEORGE   M.  WHITE. 

133.  Gold  Notes  (Promissory)  are  made  payable  in  United  States  gold  coin  or  its  equiva- 
lent. There  have  been  times  in  the  history  of  the  country  when  it  was  advisable  to  make  long 
time  notes  payable  in  gold  to  prevent  their  value  being  affected  by  possible  fluctuation  in  the 
value  of  paper  or  silver  money  before  maturity.  • 

134.  A  Negotiable  Note  specifies  on  its  face  that  the  money  will  be  paid  to  the  order  of  a 
certain  person,  or  to  a  certain  person  or  order. 

135.  A  Non-negotiable  Note  omits  the  "or  order"  or  "the  order  of,"  and  the  note  is  of  no 
value  to  any  one  except  the  person  to  whom  it  is  made  payable.  Non-negotiable  notes  are  sel- 
dom used  and  should  be  avoided. 

136.  An  Accommodation  Note  is  one  given  without  any  valuable  consideration,  the  maker 
lending  his  name  and  credit  to  the  payee. 

The  maker  of  an  accommodation  note  is  under  no  obligation  to  the  payee,  but  is  under  obli- 
gation to  any  third  party  holding  the  note,  just  as  if  the  note  were  given  for  a  consideration. 

137.  A  Collateral  Note  gives  its  holder  power  to  sell  the  securities  which  are  mentioned 
therein,  if  the  note  is  not  paid  at  maturity. 


94  BUSINESS  FORMS 

Collateral  Note 


$5000.00  New  York,  January  5,  1901. 

Thirty  days  after  date  I  promise  to  pay  to  the  order  of 
John  Blennerhasset 

Five  thousand  .^^^.-^^^^^r-^.^.^-^^^^^...-^^^-..-'^..^^^^  f^^  Dollars, 

for  value  received,  with  interest  at  the  rate  of  6%  per  annum,  having  deposited  with 
him,  as  collateral  security.  Students'  National  Bank  Stock  of  the  nominal  value  of  Ten 
Thousand  Dollars  (with  authority  to  sell  the  same  at  the  Brokers'  Board,  or  at  public  or 
private  sale,  or  otherwise,  at  his  option,  on  the  non-performance  of  this  promise,  and 
without  notice). 

A.  M.  HYDE. 


138.  Collateral  Security  is  anything  deposited  with  the  holder  of  a  note  as  a  guarantee  of 
payment.  If  bonds,  notes,  stock  certificates,  etc.,  are  offered,  they  must  be  indorsed  in  blank 
so  that  the  holder  can  dispose  of  them  if  necessary. 

EXERCISE   27 

Draw  the  notes  and  make  Journal  entries,  on  Journal  paper,  for  the  following  transactions, 
and  mention  the  books  which  should  receive  the  entries  :  — 

1.  C.  H.  Harris  &  Co.  gave  to  A.  M.  Lord  &  Co.  their  demand  note  for  $85.50,  dated 
February  5,  1901,  to  balance  account. 

Draw  the  note.  What  should  be  the  entries  on  the  books  of  C.  H.  Harris  &  Co., 
and  also  of  A.  M.  Lord  &  Co.  ? 

2.  C.  M.  Nichols  &  Co.  borrowed  of  their  bank  (Students'  National  Bank)  1500  for 
30  days.  ,  The  bank  demanded  a  judgment  note,  which  it  discounted  by  entering  on  the 
Deposit  Book  the  proceeds  of  the  note,  $497.50. 

Draw  the  note.     What  should  be  the  entries  on  the  books  of  C.  M.  Nichols  &  Co.  ? 

3.  Mrs.  A.  Winter  borrowed  $75  of  C.  H.  Reel  &  Co.  on  a  joint  note,  at  60  days,  bearing 
interest  at  3  ^  per  month,  signed  by  C.  G.  Winter  and  herself. 

Draw  the  note.     What  should  be  the  entry  on  the  books  of  C.  H.  Reel  &  Co.  ? 

4.  H.  B.  Clay  &  Co.  received  of  A.  B.  Rider  &  Son  their  note  (negotiable)  for  $400,  at 
30  days,  to  balance  account. 

Draw  the  note.  What  should  be  the  entries  on  the  books  of  H.  B.  Clay  &  Co.  and  of 
A.  B.  Rider  &  Son? 

5.  Mrs.  George  Lord  accepted  of  E.  B.  Warren  his  non-negotiable  note  for  $50,  payable 
in  three  months,  to  balance  his  board  to  date. 

Draw  the  note.     What  should  be  the  entry  on  the  books  of  Mrs.  George  Lord  ? 
.6.    H.  B.  Cooper  &  Co.  borrowed  of  the  Chicago  Real  Estate  Co.  $900  for  30  days,  with 
interest  at  6^  per  annum,  giving  as  collateral  security  ten  shares  of  City  Railroad  Stock, 
valued  at  $1000. 

Draw  the  note.     What  should  be  the  entry  on  the  books  of  H.  B.  Cooper  &  Co.  ? 

Checks  and  Certificates  of  Deposit 

139.  A  Check  is  an  order  on  a  bank  to  pay  a  certain  sum  to  a  person  or  company  named 
thereon,  called  the  payee.     It  is  signed  by  the  maker,  whose  signature  is  on  record  at  the  bank. 

Checks  must  be  numbered  consecutively,  and  each  stub  should  bear  the  same  number  as  its 
check.     It  is  usual  to  write  the  stub  first.    • 


CHECKS  AND   CERTIFICATES   OF  DEPOSIT 
Check 


95 


Chicago,  TTImJocA.  2q,  /qof.      m.  3^5 

of  Cliicago 
Fay  to  the  Order  of             ^^XxJtbxrTU ,  CIoaA  %&),         $250^ 
JbU-0  hjyU^rud/UuL  CurVcL  -M^^  '^/loo .    Dollars. 


EXERCISE   28 

Make  out  checks,  dated  to-day,  for  the  following  firms  :  — 

G.  A  Wait  &  Co.,     ...     $  25.00  W.  T.  Smith  &  Co., 

C.  M.  Drake  &  Co.,  .     .     .        68.75  W.  B.  Sanborn,     . 


$  123.50 
100.00 


140.  A  Certified  Check  is  a  check  which  has  been  accepted  by  the  bank  on  which  it  is 
drawn.     The  Paying  Cashier  accepts  for  the  bank  by  stamping  the  words  "Accepted,  payable 

through  the Clearing  House  "  on  the  face  of  the  check,  and  adding  the  date,  the  name  (f 

the  bank,  and  his  signature.     Sometimes  such  checks  are  certified  by  the  Cashier  of  the  bank 
merely  writing  the  word  "Accepted,"  the  name  of  the  bank,  and  his  signature. 

141.  When  a  certified  check  is  not  used  do  not  destroy  it,  but  indorse  the  check,  the 
same  as  any  other  (page  108),  and  deposit  in  the  bank.  When  a  certified  check  is  lost  or  de- 
stroyed, the  bank  on  which  it  is  drawn  compels  the  maker  to  give  bond  for  double  the  amount, 
in  order  that  it  may  be  protected  in  case  the  check  should  ever  be  presented  for  payment. 

142.  A  Certificate  of  Deposit  is  issued  to  a  depositor  by  a  bank,  certifying  to  the  deposit  of 
the  amount  mentioned.  It  is  generally  issued  to  a  small  depositor,  or  to  one  who  does  not 
wish  the  credit  to  show  in  an  open  account. 

Certificate  of  Deposit 


CO 

o 

Du 
UJ 

Q 

u- 
O 

h- 
o 

Ul) 

o 


Chicago,  JannAxii/if  f^,  1902. 

This  is  to  Certify  that  (S.   7H.   iTlcidi^uyyt 

has  deposited  in  this  Bank 
SlfttbTl  k'UincituL   .-^^..^^..^^^^-..^^.^^^^-^..^^.^^^^^^-^^^^^^^-^  j^  Dollars, 
Payable  to  the  Order  of     (^tdVCU  8l<yi{>'>V 
on  return  of  this  Certificate,  properly  indorsed. 

~  Cashier. 


96  BUSINESS  FORMS 

Money  OitDERS 

143.  A  Money  Order  is  an  order  (somewhat  like  a  bank  draft)  for  the  payment  of  a 
specified  sum  of  money  to  a  person  named  therein  or  to  his  order.  These  orders  may  be 
'purchased  for  tlieir  face  value,  plus  a  slight  fee,  at  any  important  post  office,  or  at  the  offices 
of  standard  express  companies. 

144.  Post  Office  money  orders  are  either  Domestic  or  International.  The  former  are  pay- 
able at  post  offices  in  the  United  States ;  the  latter  at  certain  specified  offices  abroad. 

145.  Express  money  orders,  such  as  the  American,  Wells  Fargo,  United  States,  etc.,  are 
payable  at  all  branch  offices  or  agencies  of  the  companies  at  home  and  abroad. 

Receipts  and  Vouchers 

146.  A  Receipt  is  generally  an  acknowledgment  of  a  remittance  or  payment  which  may 
have  been  made  in  cash,  or  by  note.  Receipts  are  also  given  for  other  purposes,  such  as  for 
merchandise  delivered,  etc. 

147.  Acknowledgments  of  payments  are  sometimes  made  by  letter,  by  receipt  forms,  or  by 

writing  on  the  statement,  note,  or  invoice  the  word  "  Paid,"  signing  the  firm's  name,  per , 

giving  the  date  on  which  it  is  paid. 

148.  When  an  account  is  settled  by  note,  receipt  the  statement  thus  :  "  Settled  by 
day  note per ." 

Receipt.  —  To  Apply  on  Account 


$20.00  Chicago,    (Zl^C^'H'^t    3,    WO / . 

Received  of^.^.^..^.^^^.^.^.,^..^.^^   ?.    li^kitb    2^    &a., _^ 

3^Wblvtif  ~^.-..,^-.^~^--..^-..^.^.^^.^...^.,.^^  tS  Dollars, 


to  apply  on  account. 


(g.  oc.  mood. 


Receipt.  —  In  Full  of  all  Demand 

$35.75  Boston,  January  28,  1901. 

Received  of  -^.-^..^..^-.^-^.^-.^.-..^^^^^-..^s.,-,.,^^^  Fuller  &  White  ,-^^.^^-^,>^.-^,,^,>.,..^,.-^^^,>,^^.x-n..^ 

Thirty-five  ^-.^-.^.^^^^^.-.^^^.^...^.^-.....^^^^^.^^  ^  Dollars, 

in  full  of  all  demand  to  date. 

John  G.   Brown. 

Receipt.  —  In  Full  for  Invoice 

$50.00  New  York,  May  6,,  1901. 

Received  of  ,^,,.,^,..^,-..^,^.,,-^^,,,^,-,.^.^^  Smith  &  Son^.-^^^^^-^^.-^-^-v.-^-s.^.'N..^.^ 

Fifty  ../-.^..-...-..^..^^^^-^^^^^  S  I^ollars, 

in  full  for  invoice  January  28. 

Baldwin  &  Murray. 


RECEIPTS   AND    VOUCHERS 


97 


$400.00 

Received  of. 
Four  hundred, 
in  full  of  account  to  date. 


Receipt.  —  In  Full  of  Account 

St.  Louis,  September  7,  1901. 
A.  B.  Rider  &  Son  ..^...^..,^.^^.^^^^.,..,^ 

Yq^  Dollars, 


H.    B.    Ferry  &   Co. 


EXERCISE   29 


Mail  receipts  for  remittances  received  from  the  following  firms:  — 

Febntary  6 


C.  B.  Frost  &  Co., 
G.  M.  Williams  &  Co. 
A.  B.  Rider  &  Son 
Carter  &  Brown 


On  account 

On  account 

To  balance  account 

On  account 


$50.00 

675.10 

132.62 

46.62 


149.    A  Voucher  is  usually  in  the  form  of  a  statement  with  a  receipt  attached.     It  is  used 
as  a  receipt.     Vouchers  are  numbered  consecutively  and  filed  for  reference. 


Voucher 


J^o.  20/ 

C.    G.   WHITE  FURNITURE  CO. 
Voucher. 


Chicago,    j^lLj    6,    190/. 
Address    JtbW-    VaiA. 


h 


6 


'Irv  dM^awrit 


3000  00 


Account  examined  and  found  correct, 
10.  //.  c^. 


Approved  for  payment, 


Received    jul/lf    6,    190/ . 

From  the  C.    O.    WHITE  FURNITURE   CO. 

3^A/u&&  tAau.'oUi/nzC . 

In  settlement  for  the  above  account. 


$3000'^^ 


.  j^  Dollars. 


^ftdi^a/ut  y^  &(>. 


150.    Corporations  use  vouchers  to  account  and  receipt  all  money  disbursed. 

Some  large  corporations  have  their  vouchers  so  arranged  and  printed  that  they  take  the 
place  of  their  checks  as  well  as  receipts.  When  such  combined  checks  and  vouchers  are 
received  they  should  be  entered  as  Cash,  and  then  signed  and  deposited. 


98 


BUSINESS  FORMS 


Statements  and  Account  Sales 

151.  A  Statement  is  a  copy  of  an  account,  with  the  dates  and  amounts,  as  it  appears  on  the 
Ledger. 

It  is  not  necessary  every  time  a  statement  is  made  to  show  each  month's  dates  and  amounts, 
but  begin  bj^  writing  the  date  of  the  last  statement  and  inserting  the  word  "  Balance  "  with  the 
amount,  and  then  proceed  with  the  current  month's  business. 

For  the  form  of  a  statement  see  pages  59,  60. 


EXERCISE   30 


Mail  statements  to  the  following  customers,  according  to  the  Ledger  on  March  1,  1902, 
assuming  that  statements  had  previously  been  sent  on  February  1  : 


D.  M.  ROBINSON   &   CO.,  Detroit,  Mich. 
1902  1902 


Jan. 

2 

Mdse. 

25 

00 

Jan. 

6 

10 

125 

00 

15 

13 

75 

00 

Feb. 

3 

Feb. 

3 

35 

00 

16 

15 

85 

90 

24 

75 

00 

28 

" 

100 

00 

Overcharge 
Cash 


BURRY  &  SWIFT,  Boston,  Mass. 
1902  1902 


Jan. 


Feb. 


Mdse. 


750 
125 
135 
450 


Feb. 


Cash 

30  day  note 

Cash 


500 
250 
100 


SHEA,  SMITH  &  Co.,  New  York 
1902  1902 


Jan. 

7 

Mdse. 

75 

00 

Jan. 

31 

10 

(( 

35 

50 

Feb. 

5 

16 

(( 

95 

75 

10 

Feb. 

8 

u 

27 

95 

28 

(( 

105 

00 

Mdse.  Inv.  1/6 
Cash 


50 

55 

100 


RUSSELL   &   WHITE,  New  Orleans,  La. 
1902  1902 


Jan. 

6 

Mdse. 

250 

00 

Jan. 

10 

7 

" 

100 

00 

15 

10 

u 

79 

50 

30 

Feb. 

10 
16 

(1 

76 
65 

00 
70 

Feb. 

20 

Shortage 

Freight 

Cash 


GOODRICH   &   BEST,  Memphis,  Tenn. 
1902  1902 


Jan. 

7 

Mdse. 

175 

00 

Jan. 

10 

10 

(( 

25 

00 

Feb. 

3 

15 

(( 

35 

00 

25 

Feb. 

16 

u 

16 

00 

28 

u 

65 

00 

Cash 


BOND,  ROYAL   &   CO.,  New  York 
1902  1902 


Jan. 


Mdse. 


85 

76 

100 


Feb. 


Cash 

Mdse.  Inv.  2/3 


12 

5 

332 

100 


200 
35 
25 


50 
100 


152.  An  Account  Sales  is  a  statement  from  a  commission  merchant  issued  after  the 
sale  of  a  consignment,  giving  the  name  of  the  consignor,  the  items,  and  gross  amount, 
the  charges  incurred  in  making  the  sale,  the  ■  commission,  and  the  net  proceeds.  Many 
commission  merchants  use  a  specially  ruled  form,  but  others  use  common  statement 
blanks. 


BONDS  AND   STOCK  CERTIFICATES 


99 


153.  A  Consignment  is  a  shipment  of  merchandise  from  a  person  or  persons,  to  be  sold 
on  their  account  and  usijally  at  their  risk. 

154.  The  Consignor  is  the  shipper. 

155.  The  Gross  Amount  (Sales)  is  the  sum  realized  on  the  consignment. 

156.  The   Net   Proceeds   is  the  result   obtained  after  the   commission   and   the   charges 
have  been  deducted  from  the  gross  amount. 

Account  Sales 


Wholesale  Produce  Commission 

Lot  JVo.  d.                                                              Chicago,  ^(stah^bV  22,  190/. 
Account  Sales  by  A.  M.  CHASE  ^  CO. 

Of  20  h-dWbt^  Oy/Qyplb^ 

For  (^.  6.  W-iltLanfiQ., 

Received  Qotal^fb  /8,  190/ .                   ol'h^lymcfci'yb ,  W-i^. 

6 

8 
3 
3 

^^^£^                                          @      3.00 
"       a^ijitm.                                          @      2.60 
''       COfi,js.U^                                           @      2.00 

Charges, 

Freight,  6.30.     Cartage,  60  </ 
Commission,  /O^fo 
Net  Proceeds, 

2^ 

2^ 
7 
6 

00 

00 
60 
00 

6/ 
f2 

60 

<^6 
66 

6 

6 

80 
/6 

^      ^8 

Bonds  and  Stock  Certificates 

157.  A  Bond  is  a  fractional  part  of  a  mortgage,  issued  by  a  corporation  for  a  loan 
made  to  it. 

Bonds  are  issued  in  two  forms  —  coupon  and  registered.  A  Coupon  Bond  is  one  with 
certificates  or  coupons  attached,  representing  interest  for  stated  periods  (see  illustration,  page 
100).  These  coupons  are  detached  and  presented  for  payment  as  they  become  due.  Coupon 
Bonds  are  freely  transferable.  A  Registered  Bond  is  one  payable  only  to  the  owner  whose 
name  is  registered  in  the  books  of  the  corporation.  Interest  is  usually  paid  by  check  to  the 
registered  owner.     Registered  Bonds  are  transferable  only  by  proper  assignment. 

158.  A  Stock  Certificate  is  a  certificate  of  a  stock  company,  certifying  to  the  ownership 
of  the  number  of  shares  of  its  capital  stock  mentioned  therein. 

169.  A  certificate  is  transferable  by  filling  in  the  form  on  the  back.  To  complete  the 
transfer,  the  certificate  should  be  surrendered  to  the  company  mentioned  in  order  that 
proper  transfer  may  be  made  in  the  company's  Stock  Register,  and  a  new  certificate  issued 
to  the  person  to  whom  the  stock  is  transferred. 


100 


BUSINESS  FORMS 
Coupon  Bopd 


J^o. 


United  States  of  America 

state  of  illinois 

THE   STUDENTS'   OFFICE   BUILDING 

OF    CHICAGO. 


$1000. 


First  Mortgage. 


Gold  Bond. 


Know  all  Men  by  these  Presents, 


That  The  Students'  Office  Building  of  Chicago,  a  corporation  duly  organized 
under  the  Laws  of  the  State  of  Illinois,  of  Chicago,  Illinois,  is  indebted  to  the 
beai'er  in  the  sum  of  One  Thousand  Dollars,  in  money  of  the  United  States  of 
America,  which  indebtedness  it  promises  to  pay  in  Gold  Coin  on  the  first  day  of 
March,  Anno  Domini,  Nineteen  Hundred  and  Thirteen,  at  the  office  of  the  Students' 
National  Bank  of  Chicago,  Illinois,  with  interest  thereon  at  the  rate  of  six  per 
centum  per  annum,  payable  in  Gold,  on  the  first  day  of  September  and  March  in 
each  year  according  to  the  tenor  of  the  annexed  coupons  and  upon  presentation 
and  surrender  thereof  as  they  severally,  become  due. 

This  Bond  is  one  of  a  Series  of  one  hundred  and  fifty  bonds  of  the  same  tenor 
and  date,  and  numbered  consecutively  from  1  to  150,  each  for  the  sum  of  One 
Thousand  Dollaks,  amounting  in  the  aggregate  to  one  hundred  and  fifty  thou- 
sand dollars,  the  payment  of  which  is  secured  by  a  Deed  of  Trust  dated  the  first 
day  of  March,  a.d.  1893,  to  the  Students'  National  Bank,  Trustee,  duly  executed 
and  delivered  by  said  The  Students'  Office  Building  of  Chicago,  conveying  to 
said  Students'  National  Bank,  Trustee,  the  property  therein  described. 

If  The  Students'  Office  Building  of  Chicago,  or  its  successors,  shall  make 
default  in  the  payment  of  any  one  of  the  interest  coupons  annexed  to  this  Bond 
on  the  day  the  same  becomes  due  and  such  default  shall  continue  for  sixty  days 
thereafter,  then  without  demand  or  notice  this  Bond  shall  become  due  and 
payable,  and  may  at  once  be  enforced  as  fully  as  if  it  had  become  due  by  expira- 
tion of  the  time  for  which  it  is  made  as  provided  in  the  Deed  of  Trust  mentioned, 
given  to  secure  it,  or  otherwise. 

This  Bond  shall  not  be  valid  until  it  shall  have  been  autiienticated  by  the 
Certificate  indorsed  hereon  by  the  Students'  National  Bank,  Trustee,  and  is 
issued  and  held  subject  to  the  terms  and  conditions  contained  in  said  Trust  Deed 
to  which  reference  is  hereby  made. 

In  witness  whereof  the  said  Corporation,  The  Students'  Office 
Building  of  Chicago,  has  caused  this  Bond  to  be  sealed  with  its 
corporate  seal  and  signed  by  its  President  and  Secretary  in  accord- 
ance with  a  resolution  to  that  effect,  passed  by  the  Board  of  Directors 
of  said  Company. 

Prenident. 


Secretary . 


No.  40. 


On  the  first  day  of 
March,  a.d.  1913, 

at  tub 

Students'  National 

Bank  of  Chicago. 

The  Students'  Office 
Building  of  Chicago 
will  pay  the  bearer 
Thirty  Dollars,  being 
sLx  months'  interest 
due  on  that  day  upon 
its  bond. 

President. 


No.  39. 


§30. 


On  the  first  day  of 
September,  a.d.  1912, 

at  the 

Students'  National 

Bank  of  Chicago. 

TheStMdentH'  Office 
Building  of  Chicago 
will  pay  the  bearer 
Thirty  Dollars,  being 
six  months'  interest 
due  on  that  day  upon 
its  bond. 

President. 


No.  38. 


§30. 


On  the  first  day  of 
March,  a.d.  1912, 

AT   THE 

Students'  National 
Bank  of  Chicago. 

The  Students''  Office 
Bnildiug  of  Chicago 
will  pay  the  bearer 
Thirty  "Dollars,  being 
six  months'  interest 
due  on  that  day  upon 
its  bond. 

President. 


Stock  Certificate 


Incorporated  Under  the  Laws  of  the  State  of  Illinois. 

Number  Shares 


1 


c. 


225 


M.   WELLS   FURNITURE   CO. 
Chicago,  Illinois. 
Capital  Stock  S  50000.00.    Shares  $100  each. 

This  certifies  that  C.  G.  White  is  the  owner  of  two  hundred  and  twenty-five 
shares  of  One  Hundred  Dollars  each  of  the  Capital  Stock  of  the  C.  M.  Wells  Furni- 
ture Company,  Transferable  only  on  the  Books  of  the  Corporation  in  person  or  by 
Attorney  on  surrender  of  this  Certificate. 

In  witness  whereof  the  duly  authorized  officers  of  this  corj^oration  have 
hereunto  subscribed  their  names  and  caused  the  Corporate  Seal  to  be  hereto 
affixed,  this  first  day  of  June,  a.d.  1901. 

W.  H.  Pierce,  Secretary.  C.  M.  Wells,  President. 


EXPRESS   C.O.D.   ENVELOPE 


101 


Express  C.O.D.  Envelope 

160.  An  Express  C.O.D.  Envelope  is  used  when  shipping  goods  C.O.D.  by  express,  and  is 
furnished  by  the  express  companies  to  their  patrons.  The  face  of  the  envelope  is  filled  out  by 
the  shipper  and  the  invoice  is  inclosed.  It  is  then  delivered  to  the  express  company  for  the 
collection  of  the  amount  it  calls  for,  when  the  goods  accompanying  it  are  delivered. 


Express  C.O.D.  Envelope 


WELLS  FARGO   ^   COMPAJ^Y'S  EXPRESS 


Amount  of  bill    $  \)0 .  00 , 

And  ail  charges  for  return  of  money. 

C.  O.  D. 


FROM 


Chicago,  III.,     hon&    fO,    190 f . 

On  JdTyitQ^  fj.   lA}oa(i, 

(Z'VL^ti/yb,  Jit. 


Instructions  to  Agents. 

"C.O.D."  goods  must  not  be  opened   or  delivered  until  the  Invoice  is  paid. 
These  are  shipper's  instructions  ;  no  discretion  is  allowed  in  the  matter. 
5t^™ Return  proceeds  with  this  envelope  without  delay.     "C.O.D."  packages  must 
not  be  forwarded  beyond  original  destination  unless  by  special  instructions  from 
Agent  at  shipping  otiice. 

If  C.O.D.  matter  is  refused  or  can  not  be  delivered  the  shipping  office  must  be 
properly  notified,  and  if  not  disposed  of  in  30  days  after  such  notice,  it  may  be 
returned,  subject  to  charges  both  ways. 

Perishable  property,  such  as  Oysters,  Fish,  Fresh  Meats,  Fruits,  Live  Poultry,  etc., 
if  refused  by  consignee,  sell  immediately  to  best  advantage  for  account  of  owner. 

Notice  to  Shippers. 

If  the  money  to  be  collected  from  the  consignee  on  delivery  of  the  property 
described  herein  is  not  paid  within  30  days  from  date  above,  the  shipper  agrees 
that  the  company  may  return  said  property  to  him  at  the  expiration  of  that  time 
subject  to  the  conditions  of  its  receipt  for  shipment,  that  he  will  pay  the  charges 
for  transportation  both  ways,  and  that  the  Liability  of  tlie  Company,  for  such  prop- 
erty, while  in  their  possesision,  for  the  purpose  of  making  such  collection,  shall  be 
that  of  warehousemen  only. 

Remarks. 


Freight  Bills  and  Receipts 

161.    A  Freight  Bill  is  a  bill  from  a  railroad  or  transportation  company  for  charges  on 
goods  received  at  its  warehouse.     It  is  made  out  to  the  consignee. 


102 


BUSINESS  FORMS 
Freight  Bill 


Consignee  /iilL  ^  SvaWTb  cft^dt  ^otcf.  &X>.,  ^cyVlV-tV^t  Station,  6 J /5  WO / , 

Fro.  J\'o.  206 

Destination                                                            via 

To  The  Pittsburg,  Cincinnati,  Chicago  ^  St.  Louis  Railway  Co.,  Dr. 

For  Charges  on  articles  way-billed  from  /J^ChvLo-Tb  via 

No.  of 
Pkg. 

Articles  and  Marks 

Weight 

Eate 

Freight 

Advances 

Date  of  "Way-bill 

61/2 

Series  and  Number 
of  Way-bill 

2 

<^m'.  ^OMZtn-a 

ffO 

60 

i/./q 

Car  Initial  and 

Number 

Consignor 

Connecting  Line 

1                 1           1 

Reference 
Original  Car 

„      ,      ,  _.              ,                            Total  to  collect 
lieceived  Fayment 

Original  Way-bill 

No. 

Freight  Agent.                     Brayage 

Original  Point  of 

19     . 

Shipment 

Original  paid  Freight  BiUa  should  accompany  all  claims  for  overcharge,  loss,  or  damage. 

162.    Freight  Receipts  are  of  two  kinds ;  one  is  a  receipt  from  a  transportation  company 

for  goods  to  be  shipped  (as  illustrated  below),  and  the  other  is  a  receipt  for  charges  paid  on 

goods  either  received  or  shipped. 

Freight  Receipt 


FITTSBURG,  CUTCIJ^JfATI,  CHICAGO  ^  ST.  LOUIS  R.R.  CO. 

Original.                                                      iTicuilaru,  J^vui.,  6 J /2,  190/. 

Received  from  ??J(IVW-9V  Sv&y  Juyyu  &a. 

In  apparent  good  order,  the  articles  named  below,  to  he  delivered  in  like  good  order, 
without  unnecessary  delay. 

To  /Oil  ^  Bu>W^  gtttt  &9t(f.   ^a. 

At  Sarbv-s.'b^^,  Joixi. 

Marks 

As  per  Conditions  of  Company'' s  Bill  of  Lading. 

No. 

Description  of  Packages 

Weight, 
Subject  to  Cor- 
rection 

Rate  of  Freight 
per  100  lb. 

s 

Jr.  ??Uav&,  Agent. 

f/0 

25 

BANK  NOTICES 


103 


163.  A  Bill  of  Lading  is  a  written  instrument  from  a  railroad  or  transportation  company, 
acknowledging  the  receipt  of  certain  goods,  which  it  promises  to  ship  to  destination,  in  good 
order,  under  the  conditions  named  in  the  instrument. 

Bill  of  Lading 


PENNSYLVANIA    COMPANY 


Bill  of  Lading  J^o.  dltUlTlQ^,  6'fbla,  Station,  ju.'PVb  f  f ,   WO / . 

Received  from  dm^tUA^Cb'Tb  cft&eL  (^ota^.  &0: 
BY  PENNSYLVANIA  COMPANY, 

The  property  described  below,  in  apparent  good  order,  except  as  noted  (contents  and  condition  of  contents  of 
packages  unknown),  marked,  consigned,  and  destined  as  indicated  below,  whicli  the  said  company  agrees  to 
carry  to  the  said  destination,  if  on  the  roads  operated  by  it,  otherwise  to  deliver  to  another  carrier  on  the  route 
to  said  destination. 

It  is  mutually  agreed,  in  consideration  of  the  rate  of  freight  hereinafter  named,  as  to  each  carrier  of 
all  or  any  of  said  property  over  all  or  any  portion  of  said  route  to  destination,  and  as  to  each  party  at  any  time 
interested  in  all  or  any  of  said  property,  that  every  service  to  be  performed  hereunder  shall  be  subject  to  all 
the  conditions,  whether  printed  or  written,  herein  contained,  and  which  are  hereby  agreed  to  by  the  shipper, 
and  by  him  accepted  for  himself  and  his  assigns  as  just  and  reasonable. 

Upon  all  the  conditions,  whether  printed  or  written,  herein  contained,  it  is  mutually 
agreed  that  the  rate  of  freight  from  (Xttia,'K(^&  to  c/a,  (P^kle^aOf  Jtt.,  is  to  be, 
in  cents  per  100  lb. 


If... Times 
First  Class 


If  First 
Class 


If  Second 
Class 


If  Third 

Class 


If  Fourth 
Class 


/si 


If  Fifth 
Class 


If  Sixth 

Class 


If  Special 


Class 


Rate 


And  advanced  charges  at 


Marks,  Consignee,  and  Destination 


Description  of  Articles 


/   /Owue.k.te' 

/  K 


iyyv 


/    fdu/}icit& 


Weight 
(subject  to  correction) 


72 


CONDITIONS 


L.    //.    ieet, 


Agent. 


Bank  Notices 

164.    Notice  of  Overdraft  is  a  form  used  to  notify  a  depositor  that  his  bank  account  is 
overdrawn. 

Notice  of  Overdraft 


Stut)cnt0*  National  Banli 

Chicago,  jdnudvy  20,  1902. 
Mr.  Jah/yu  ^uw-cubt, 

Your  a/icount  appears  to  he  overdrawn  $SS .00 . 
Please  bring  in  your  book  to  be  written  up,  and  deposit   the  amount  of 
overdraft. 

Can/iier. 


104  BUSINESS  FORMS 

165.    Notice  of  Note,  or  Notice  of  Draft,  is  a  notice  from  a  bank,  informing  the  person  or 
company  whose  name  is  mentioned  of  a  note  or  draft  due  at  the  bank  on  the  date  mentioned. 

Notice  of  Note 


Stubente'  motional  Banli 

Chicago,  Jd'VbUyCi'by  d,  1902. 

Your  Paper  for  $6000 
Matures  on  JcL'H/iiCb'by'  6. 

(&.  S.  Suyuyyv, 

Caxhier. 

Checks  presented  in  payment  must  he  certified. 

Banking  hours,  10  a.m.  to  3  p.m. 
Saturdays,  9  a.m.  to  12  m. 


166.  Protest  for  Non-payment  is  a  notice  sent  to  the  maker  of  a  note  or  check,  or  acceptor 
of  a  draft,  informing  him  that  his  note,  check,  or  acceptance  was  not  paid  at  the  time  of  bank 
closing  and  was  protested  in  consequence. 

Protest  for  Non-payment 


State  of  Illinois  ^  ^^  ^^  known  that  on  this  SlqktttwtA 

Cook  County     \ss.  ^  / 

City  of  Chicago  J  ^^V  ^f  /(^^'^Cl'l^y/  in,  the  year  of  our  Lord 

one  thousand  nine  hundred  and  vW-O,  I,  Ju.  CC.  joTbtQ^^  a  J^otary  Public,  duly 
commissioned  and  sworn,  and  residing  in  the  City  of  Chicago,  in  said  County 
and  State,  at  the  request  of  Students'  National  Bank  of  Chicago,  went  with 
the  original  '}tOv&  which  is  above  attached,  to  the  office  of  /J'h  Jo.  futVcC  (f'  ^lo. 
and  demanded  payment  thereon,  which  was  refused 

Whereupon  I,  the  said  Notary,  at  the  request  aforesaid,  did  Protest,  and  by  these  Presents  do  Solemnly 
Protest,  as  well  against  the  Maker  of  said  Instrument,  the  indorsers  thereof,  as  all  others  whom  it  may  or 
doth  concern,  for  exchange,  re-exchange,  and  all  costs,  charges,  damages,  and  interest  already  incurred 
by  reason  of  the  non-payment  of  the  said  instrument. 

And  I,  the  said  Notary,  do  hereby  certify  that  within  forty-eight  hours  of  the  day  and  year  above 
written,  due  notice  of  the  foregoing  Protest  was  put  in  the  Post  Office  of  Chicago,  111.,  as  follows:  — 

Notice  for  ?n.  A  Biui  V  ^.,  ^kUoucfa. 
Notice  for  jak'vu  ^t&w-cLvt,  ^kie^oMo-. 
Notice  for 

Each  of  the  above-named  places  being  the  reputed  place  of  residence  or  business  of  the  person  to  whom 
this  notice  was  directed. 

In  Testimony  Whereof,  I  have  hereunto  set  my  hand  and  affixed  my  official  seal,  the  day  and  year 
above  written. 

L.  (Z.  ^'wt^, 

Notary  Public. 


167.  Notice  of  Protest  is  sent  to  indorsers  of  a  note  or  draft,  and  to  the  drawer  of  a 
draft,  informing  them  that  the  note  or  draft  has  not  been  paid,  and  that  the  bank  looks  to 
them  for  the  immediate  payment  of  it. 


POWER    OF  ATTORNEY  106 

Notice  of  Protest 


State  of  Illinois  i 

r  SS 

County  of  Cook  i     '  Chicago.  III.,  fcunVUdlAf  /8,   1902. 

Sir:    A    cJratb 
for  $/00 _,^_. 

Payable  ^tmA^TbtoJ  JtcitLarLaL  SanA, 

Signed  hy  TH.   h.   SluC    ^    ^O. 
Indorsed  by   uOii^f 


has  been  this  day  by  me  protested  for  non-payment,  and  I  hereby  notify  you  that  the  payment 
thereof  has  been  duly  demanded,  and  that  the  holders  look  to  you  for  payment,  damages,  interest, 
and  cost. 

Done  at  the  request  of  the  Students'  National  Bank  of  Chicago,  111. 

L.  (Z.  f(yyit^, 


To  Jafwi   ^tbW-dvt 

Please  forward  inclosed  notices. 


/ 

Notary  Public. 


Power  of  Attorney 

168.    A  Power   of   Attorney  is   a   written   instrument   in    which   the   first   party  named 
gives  to  the  second  party  legal  authority  to  act  for  him  as  may  be  specified  therein. 

Power  of  Attorney 


Know  all  Men  by  these  Presents  that   c/ 
^,    ^.    Ro^Q.  a^  cA&vv-   Zlavh   ^itif 

have  made,  constituted,  and  appointed,  and  by  these  Presents  do  make,  constitute,  and 
appoint  j/d'nv&a'   ZO-.    €ttly^  at  Cit{>'a,'yvu,    cyf,  Zi.,  'nvu 

true  and  lawful  Attorney  for  vn^e^  and  in  'm.u  name,  place,  and  stead  lav  tke>  jn^uvja^o^e^ 
ot  naaatCatCna  ayncL  &ii&&tina  tk&  a^cit&  at  ^,  ^.  Ram^  I/'  (^o/a-  ^'u>&-eA.'i^  ^t^v& 
las^t&cC  at  oAo.  ^062  BvaculAAWAt,  c/l's/W'  llavk^ 

giving  and  granting  unto  ■>;ixy  said  Attorney  full  power  and  authority  to  do  and  perform 
all  and  every  act  and  thing  whatsoever  requisite  and  necessary  to  be  done  in  and  about  the 
premises,  as  fully  to  all  intents  and  purposes,  as  c/  might  or  could  do  if  personally 
present,  with  full  power  of  substitution  and  revocation  hereby  ratifying  and  confirming 
all  that  yyvu  said  Attorney  or  /tt^  substitute  shall  lawfully  do  or  cause  to  be  done  by 
virtue  hereof. 

In  Witness  Whereof  -u^fi-  have  hereunto  set  a^ov  liand  and  seal  the  tkivcL  day 
of  jwK&,  one  thousand  'yivyve^  hundred  and  an&. 

Signed,  sealed,  and  delivered  in  presence  oi\  0    ^    Ra  PsealT 

fa/vyv&Qy   W^.    Sttio'  [seal] 


106 


BUSINESS  FORMS 


Letters  of  Credit 

169.    A  Letter  of  Credit  is  a  letter,  usually  from  a  bank,  authorizing  a  foreign  banker  to  give 
the  holder  credit  for  the  amount  stated  therein. 

Letters  of  Credit  are  used  especially  by  persons  traveling  in  foreign  countries. 


Letter  of  Credit 


Circular  Letter  of  Credit 

Ei|e  Nortfjern  Eruist  Compattg 

Chicago,  III.,   jamii'a.vy,   6,   1902. 

To  the  Bankers, 

Correspondents  of  the  JS'orthem  Trust  Com- 
pany named  in  the  annexed  list. 

Gentlemen  :  — 

We  heg  to  inform  you  that  ^.  ^.  /flit 
the  hearer  of  this  letter  is  authorized  to  draw  on  the 
Bank  of  Scotland,  Lothhury,  London,  England,  for 
£/000,  say  an&  tkcyu^oAvcC  _-x.,.-^.^-^-^.-x.-v^  pounds  sterling, 
to  which  extent  this  Bank  engages  to  honor  /vuu 
drafts  drawn  at  sight. 

It  is  understood  that  this  Credit  shall  remain  in 
force  until  Tna.%&h  /,  /^02. 

All  drafts  negotiated  under  this  Credit  must 
state  on  their  face  the  number  {Jfo.  60f)  and  date 
of  this  letter,  and  the  amount  thereof  must  be  in- 
dorsed hereon,  your  charges  being  deducted  from  the 
proceeds. 

A  specimen  of  ^.  ^.  /fvtt'ay  signature  is  append- 
ed to  the  letter  of  introduction  of  which  he  is  the 
bearer. 

This  letter  must  be  returned  with  the  last  draft 
drawn  against  it. 

Countersigned:  Your  obedient  servants. 


President. 


Cashier. 


N.  B.  —The  bearer  is  advised  to  keep  the  Letter  of  Introduction  apart 
from  the  Letter  of  Credit  to  prevent  their  being  lost  or  stolen  together, 
also  to  affix  immediately  his  usual  signature  at  the  place  indicated  in  the 
Letter  of  Introduction  as  a  precaution  against  forgery  in  the  event  of 
the  Letter  of  Introduction  or  Letter  of  Credit  falling  into  improper 
hands.  The  Northern  Trust  Company  will  not  be  responsible  for  the 
consequences  arising  from  an  omission  by  bearer  to  observe  these 
precautions. 


JYo.  6oq 

Wi^z  Wortj^Etn  SErust  Compang 
Chicago,  jcMvu^a/iy,  6,  1902. 

To  the  Bankers,  Correspond- 
ents of  the  Korthem  Trust 
Company. 

Gentlemen  :  — 

This  serves  to  intro- 
duce to  you  Mr.  ^.  #,  ffilt 
of  (Q^ki(M.(fa,  Jtt. ,  the  bearer 
of  our  Circular  Letter  of 
Credit  J^o.  SO'^,  a  specimen 
of  whose  signature  is  at  foot 
hereof. 

Yours  truly, 


Signature:  ^.  #.  f-filt. 


N.B. — The  bearer  is  advised  to 
keep  the  Letter  of  Introduction  apart 
from  the  Letter  of  Credit  to  prevent 
their  being  lost  or  stolen  together, 
also  to  afhx  immediately  his  usual 
signature  at  the  place  indicated  in 
the  Letter  of  Introduction  as  a  pre- 
caution against  forgery  in  the  event 
of  the  Letter  of  Introduction  or  Let- 
ter of  Credit  falling  into  improper 
hands.  The  Northern  Trust  Company 
will  not  be  responsible  for  the  conse- 
quences arising  from  an  omission  by 
bearer  to  observe  these  precautions. 


Bills  of  Sale  and  Assignments 

170.    A  Bill  of  Sale  is  a  written  instrument  in  which  the  party  of  the  first  part  grants  and 
conveys  to  the  second  party,  for  a  consideration  of  money,  all  his  right,  title,  etc.,  to  the  per- 


NEGOTIABLE  PAPER  107 

sonal  property  mentioned.     In  many  states  this  instrument,  to  be  valid,  must  be  placed  on 
record  with  the  County  Recorder  or  some  other  official. 

Bill  of  Sale 


Know  all  Men  by  these  Presents,  that   c/,   f.    ^.    ??l&vvitt 
of  the   &Cti^  a^  ^kl&Axcfo-  in  the  County  of   (^aak,  and  State  of  JtLinoioy,  party  of  the 
first  part,  for  and  in  consideration  of  the  sum  of    t^v-o   kuncL'L&cL  ..^-^^^^-^^-^q  dollars, 
lawful  money  of  the  United  States  of  America  to  m.^  in  hand  paid,  at  or  before  the 
ensealing  and  delivery  of  these  Presents  by   c/.    ^.    dvrvatd 
oj-  t/t&   ^Itu  at   (^kie^aa,    jn-oivtu 

of  the  second  part,  the  receipt  whereof  is  hereby  acknowledged,  have  granted,  bargained, 
sold,  and  delivered,  and  by  these  Presents  do  grant,  bargain,  sell,  and  deliver  unto  the 
said  party  of  the  second  part,  all  the  following  goods,  chattels,  and  property,  to  wit: 

(yfo.  iO  JLch  ^aLt&  oft.;  (>-&to-ruiUnq  to  'vyv&  g^'kcL  now-  i^n  yyuu  '^aa^e.Q.Q^vo-'yv  at  tke 
ys^ta^ey   tixoX.  clIov&o-ciCcI 

To  have  and  to  hold  the  said  goods,  chattels,  and  property  unto  the  said  party  of 
the  second  part  kCa^  heirs,  executors,  administrators,  and  assigns,  to  and  for  kia^  own 
proper  vise  and  behoof,  forever. 

And  I  the  said  party  of  the  first  part  do  vouch  kiAn.  to  be  the  true  and  lawful 
owner  of  the  said  goods,  chattels,  and  property,  and  have  in  full  power,  good  right, 
and  lawful  authority,  to  dispose  of  the  said  goods,  chattels,  and  property,  in  manner  as 
aforesaid :  And  I  do  for  my  heirs,  executors,  and  administrators,  covenant  and  agree  to 
and  with  the  said  party  of  the  second  part  to  warrant  and  defend  the  said  goods,  chattels, 
and  property  to  the  said  party  of  the  second  part  kt^  executors,  administrators,  and 
assigns  against  the  lawful  claims  and  demands  of  all  and  every  person  and  persons 
whomsoever. 

In  Witness  Whereof   w-a  have  hereunto  set  ativ  hands  and  seals,  the  j,vi 
day  of  /^-fo-y  in  the  year  one  thousand  nine  hundred  and  two. 

Sealed  and  delivered  in  the  presence  of  "i  n    ^    in^       'ts  r         -■ 

^  /  '  f.    ^.    me^'bvvCC  [seal] 

^  c/.    ^,    CLvnatd  [seal] 


171.  An  Assignment  is  an  instrument  by  which  certain  property  or  rights  are  transferred 
to  another  party  for  a  consideration.  There  are  different  forms  of  assignments.  Frequently 
an  assignment  is  written  on  the  back  of  another  instrument  to  transfer  the  property  or  rights 
represented  by  that  instrument. 

A  party  may  make  a  general  assignment  of  all  his  property.  This  is  done  in  case  of  failure 
in  business,  for  the  purpose  of  securing  to  the  creditors  a  fair  division  of  the  remaining  assets. 

SECTION  II.    NEGOTIABLE  PAPER 

172.  Negotiable  Paper  consists  of  notes,  drafts,  checks,  and  similar  papers  of  value,  which 
are  made  payable  "  to  bearer,"  or  "  to  order,"  and  are  therefore  salable  on  delivery  or  by 
indorsement.  In  the  latter  case  the  signature  of  the  owner  or  payee  is  required  on  the  back 
of  the  instrument,  and  constitutes  a  brief  form  of  assignment. 


108  BUSINESS  FORMS 


Indorsements 


173.  An  Indorsement  is  a  signature,  with  or  without  other  words,  written  on  the  back  of  a 
check,  note,  or  draft. 

The  indorsement  should  be  written  across  the  back  of  the  left-hand  end  of  the  paper, 
the  top  of  the  writing  being  toward  the  end  of  the  paper. 

There  are  seven  forms  of  indorsement,  —  In  Blank,  In  Full,  Without  Recourse,  Non- 
negotiable,  For  Collection,  For  Signature,  and  For  Deposit. 

174.  In  Blank.  —  This  is  the  simple  indorsement  of  the  payee's  name  on  the  back  of  a 
clieck,  note,  or  draft,  making  it  payable  to  bearer  and  transferable  by  delivery  to  a  third  party. 

175.  In  Full.  — A  note,  check,  or  draft  is  indorsed  in  full  when  the  payee  makes  it  pay- 
able to  the  order  of  some  other  person  or  persons  by  writing  on  the  back  of  it,  "  Pay  to  the 
order  of ,"  and  signing  his  name. 

176.  Without  Recourse.  —  If  the  words  "  without  recourse  "  precede  the  indorser's  name, 
they  release  him  from  all  responsibility  for  the  payment  of  the  paper.  Consequently  it  is 
seldom  that  such  an  indorsement  is  accepted. 

177.  Non-negotiable. — Non-negotiable  or  restrictive  indorsements  limit  the  payment  to  a 
particular  person.     The  indorsement  is  written  :   "  Pay  to "  or  "  Pay  to only." 

178.  For  Collection.  — These  words  should  appear  above  the  indorser's  name  on  such  notes 
or  drafts  as  are  given  to  a  bank  for  collection. 

179.  For  Signature.  —  When  a  check  is  given  to  a  person  who  is  not  known  at  the  bank 
and  who  has  no  facilities  for  getting  it  cashed,  the  payee  should  indorse  the  check  in  blank, 
and  then  have  the  maker  indorse  below  him,  after  which  the  bank  will  cash  it  without  further 
identification. 

180.  For  Deposit.  —  Wlien  checks  are  deposited  they  must  be  indorsed  before  they  will 
be  accepted  by  the  bank.     The  indorsement  may  be  as  follows  :   "  For  deposit  to  the  account 

of ."     Such  an  indorsement  is  no  longer  accepted  by  the  Chicago  and  New  York  Clearing 

Houses,  which  now  require  that  all  indorsements  on  checks  or  other  paper  for  deposit  shall  be 
in  blank,  or,  "  Pay  to bank  or  order,"  without  qualification. 

Forms  of  Indorsement 
(In  Blank)  (Non-negotiable) 

/.  /f.  Roa^e.  V  €a.  ^^V  ^^  ^-  ^-  ^^i^t^^V  only. 

/.    /if.    Ra^e.   V   ^. 

(In  Full)  (For  Collection) 

Pay  to  the  order  of  W.  G.  Goodrich.  Pay  to  the  order  of  Students'  Bank, 

I  ff.  Ro^e.  V  ^a.  f""^  collection. 


Pay  to  W.  G.  Goodrich  or  order. 

f.  If.  Raa^e.  V  ^. 


(Without  Eecourse) 


(For  Signature) 


Pay   to  the   order   of   W.   B.    Whitney,  (For  Deposit) 

without  recourse.  p^j^y  t^  Students'  Bank  or  order, 

f.  If.  Ro^e.  V  €o.         '  f.  f-f.  Ra^e.  V  €a. 


DISPOSITION  OF  NOTES  AND  DRAFTS  109 

181.  An  Indorser  of  a  note  is  a  person  who  writes  his  name  on  the  back  of  a  note,  or  across 
its  face. 

182.  A  Guarantor  is  one  who  indorses  a  note  to  secure  its  payment,  thus  lending  his  credit 
to  the  note.  He  may  do  this  as  an  accommodation,  or  for  a  consideration,  and  may  demand 
collateral  to  secure  himself. 

183.  An  Indorsed  Note  is  any  note  bearing  a  signature  other  than  the  original  signature 
of  the  maker  on  the  face  of  the  note. 

184.  If  the  payee  disposes  of  his  note  he  must  indorse  it.  Then  his  interest  in  the  note 
ceases,  except  that  he  is  still  responsible  to  any  subsequent  indorsers  or  holders  of  the  note  for 
its  payment.  In  case  of  non-payment  an  indorser  who  is  obliged  to  pay  has  a  right  of 
action  against  the  maker  or  any  of  those  who  indorsed  before  him,  unless  the  words  "  without 
recourse  "  precede  the  signtiture.      Similar  rules  apply  to  drafts. 

SECTION  III.    DISPOSITION  OP  NOTES  AND  DRAFTS 

Collections 

185.  Notes  may  be  held  or  carried  by  the  payee  until  they  become  due  and  then  be  pre- 
sented for  payment.  It  is  better,  if  a  note  is  carried,  to  give  it  to  the  bank  for  collection  a 
few  days  before  maturity.     Especially  is  this  the  case  when  the  maker  resides  in  another  city. 

186.  Drafts.  —  When  the  collection  of  drafts  is  not  made  through  the  firm's  bank,  then 
the  drafts  should  be  drawn  payable  to  the  most  reliable  banks  in  the  different  cities  where 
the  customers  reside.  In  the  latter  case  the  bookkeeper  should  write  to  each  cashier  and 
inclose  the  drafts  with  a  request  to  collect  them  and  return  proceeds. 

Discounts 

187.  Notes  and  drafts  may  be  discounted  or  sold.  A  person  who  does  business  with  a 
bank  usually  expects  to  dispose  of  a  reasonable  amount  of  his  customers'  paper  there. 

•    188.    In  discounting  paper  at  a  bank  the  person  so  doing  must  indorse  it  in  blank,  thus- 
guaranteeing  its  payment.     The  bank  then  gives  him  credit  for  the  face  of  the  note  (or  for 
the  face  plus  the  interest  if  it  be  an  interest-bearing  note)  less  the  discount  on  this  amount  at 
the  rate  agreed  upon  for  the  time  the  note  still  has  to  run.     Some  banks  give  credit  for  the 
face  of  interest-bearing  notes. 

189.  Notes  may  be  used  as  collateral.  In  such  cases  a  receipt  should  always  be  taken 
describing  them  accurately,  and  stating  for  what  purpose  they  were  delivered. 

Protests 

190.  A  note  or  time  draft  must  be  protested  if  it  is  not  paid  on  the  day  of  maturity.  If 
it  is  not  paid  by  the  time  the  bank  closes,  it  is  given  to  a  notary  public,  who  formally  demands 
payment  of  the  maker  of  the  note  or  acceptor  of  the  draft,  and  sends  him  a  protest  (page  104). 
Notice  of  protest  is  sent  to  every  indorser,  and  in  case  of  drafts  to  the  drawer  as  well.  It  is 
imperative  that  notices  of  protest  be  sent  to  drawer  and  indorsers,  for  if  they  are  not  so  noti- 
fied their  responsibility  ceases.  If  the  paper  has  been  discounted,  or  given  to  a  bank  for  col- 
lection, the  bank  attends  to  this. 

Note.  —  If  the  ordinary  date  of  maturity  falls  on  Sunday  or  a  holiday,  payment  is  legally  due  either  the  day 
before  or  the  day  following,  according  to  the  laws  of  the  state  in  which  the  note  or  draft  is  made  payable. 


110  BUSINESS  FORMS 


Renewals 


191.  It  sometimes  happens  that  the  maker  of  a  note  can  not  pay  it  when  it  becomes  due. 
In  order  to  avoid  having  his  note  protested  he  must  arrange  for  a  renewal.  This  generally 
results  in  his  giving  a  new  note  for  the  amount,  in  exchange  for  the  old  one. 

It  sometimes  happens  that  the  payee  is  willing  to  renew  the  note,  but  can  not  do  so,  it 
having  passed  out  of  his  possession.  He  may  in  such  a  case  take  the  new  note  of  the  maker 
and  give  him  a  check  for  the  amount,  with  which  the  maker  can  pay  the  note  when  it  is  pre- 
sented.    A  part  renewal  is  accomplished  in  the  same  manner. 

QUESTIONS  FOR  DISCUSSION 

1.  Explain  all  the  steps  in  the  life  of  a  note  which  is  given  in  payment  for  merchandise,  indorsed  to  other 
parties,  discounted  at  a  bank,  and  paid  at  maturity.  2.  Repeat,  assuming  that  the  note  is  protested  for  non- 
payment. 3.  What  are  the  possible  Journal  entries  ?  4.  Trace  the  steps  in  the  life  of  a  time  and  of  a  sight 
draft,  and  give  possible  Journal  entries.  5.  What  papers  considered  in  this  part  of  the  book  may,  under  any 
circumstances,  be  treated  as  cash  ?     6.   Discuss  different  ways  of  Journalizing  sales  of  merchandise,  C.O.D. 


PART   IV.     BUSINESS   PRACTICE 

General  Instructions.  —  The  first  four  sets  of  books  record  the  transactions  of  as  many- 
different  kinds  of  business,  and  are  to  be  made  up  from  the  "  Manager's  Instructions 
to  his  Bookkeeper";  the  fifth  set  comprises  the  work  of  bank  clerks.  The  student  is 
supposed  to  be  the  bookkeeper  and  to  have  charge  of  the  books  of  the  different  departments. 

The  various  entries  made  in  the  different  sets  will  enable  the  student  without  difficulty 
to  take  charge  of  almost  any  set  of  books ;  provided,  of  course,  that  he  uses  judgment  in 
reference  to  the  books  which  are  required,  and  to  those  accounts  which  are  peculiar  to  each 
particular  business. 

The  student  should  carefully  note  all  the  instructions  given  in  the  different  sets.  In 
many  cases  they  are  given  more  fully  than  they  would  be  in  actual  business  practice.  In 
some  business  houses  the  -managers  have  very  little,  if  any,  knowledge  of  bookkeeping,  so 
that  the  student  must  learn  to  rely  on  himself. 

The  student  may  act  as  his  own  Bank  Teller,  by  recording  in  his  Deposit  Book  the 
total  amount  of  deposits  as  mentioned  in  the  exercises,  and  also  the  amounts  of  all  notes 
discounted  at  the  bank. 

The  total  amount  of  the  "  cash  sales "  each  day  should  be  entered  immediately  in  the 
Cash  Book,  from  the  exercises. 

The  "orders  received"  are  to  be  entered  immediately  in  the  Sales  Book  on  the  date 
of  receipt,  instead  of  being  copied  from  the  Shipping  Book  (see  page  41),  as  the  latter  is  not 
introduced  in  the  exercises.  The  prices  are  mentioned  on  the  orders  to  avoid  price  lists, 
as  the  handling  of  them  would  be  cumbersome  for  the  student;  but  in  actual  business  the 
prices  might  be  taken  from  price  lists  or  determined  in  some  other  way. 

"  Invoices  received  during  the  month,"  in  each  set,  are  to  be  copied  on  blank  invoices 
and  then  journalized,  with  the  exception  of  those  that  have  been  paid  and  charged  directly 
to  representative  accounts. 

The  year  should  be  indicated  on  all  papers  and  in  each  of  the  books. 

The  posting  may  be  done  daily  or  at  the  end  of  each  lesson  assigned  by  the  teacher. 

SECTION  I.    WHOLESALE  GROCERY  AND  PRODUCE  BUSINESS 

SET   I. —EXERCISES 

General  Instructions.  —  Books  required :  Deposit  Book,  Check  Book,  Bill  Book,  Sales 
Book,   Cash  Book,  Journal,  Ledger. 

The  money  columns  in  the  Cash  Book  may  be  named  as  follows  :  debit  side  — "  Sales " 
and  "Sundries";  credit  side  —  "Expense"  and  "Sundries." 

Representative  accounts  used  :  Bills  Payable,  Bills  Receivable,  Cash,  Expense,  Furniture 
and  Fixtures,  Horses  and  Wagons,  Insurance,  Interest  and  Discount,  Loss  and  Gain, 
Merchandise,  Mileage,  Pay  Roll,  Postage,  Rent,  Salary,  Sales,  Suspense,  Traveling  Expense, 
Michigan  Central  R.R.   Shares. 

The  name  of  the  firm  is  H.  B.  Clay  &  Company.  The  partners  are  H.  B.  Clay,  John 
C.  Goodrich,  and  W.  C.  Ray.  H.  B.  Clay  is  to  be  the  manager  and  to  have  charge  of  the 
financial  part   of   the  business,  while  John  C.   Goodrich  and  W.  C.    Ray  are  to  work  up 

111 


112  BUSINESS  PRACTICE 

trade    outside.     Each  partner   is   to   receive  a  salary  of  $200  a  month,  for  services.     The 
partners  invest  equally,  and  the  net  profit  or  loss  is  to  be  divided  equally. 

Manager's  Instructions  to  his  Bookkeeper 

Chicago,  January/  3,  19 —  —  "  As  shown  by  the  contract,  we  partners  invest  as  follows  : 
H.  B.  Clay  invests  cash,  $1500,  and  merchandise  (per  inventory),  $2000.  John  C.  Goodrich 
invests  cash,  $  2000,  and  furniture  and  fixtures  (per  inventory),  $  1500.  W.  C.  Ray  invests 
cash,  $2000,  and  horses  and  wagons  (per  inventory),  $1500. 

"  Deposit  to-day  $  5500. 

"  Write  out  a  check  for  $  25,  to  the  order  of  currenc}^,  for  the  cash  drawer.  Take  it 
with  you  when  you  go  to  the  bank  and  have  it  cashed. 

"  Give  John  C.  Goodrich  a  check  for  $  50,  and  W.  C.  Ray  one  for  $  35. 

"Send  a  check  for  $300  to  C.  H.  Miller  &  Co.,  rent  for  January. 

"  Orders  received  :  "  — 

Order  No.  787.  Springfield,  III.,  January  3,  19.... 

H.  B.  Clay  &  Co.,  Chicago. 

Please  ship  to  us  via  fast  freight :  10  bbls.  Pillsbury  flour,  @  $  4 ;  3  bbls.  granulated 
sugar,  325  lb.  each,  @  5^;  and  charge  to  the  account  of 

C.  B.  Frost  &  Co. 


Order  No.  75.  Chicago,  January  3,  19.... 

H.  B.  Clay  &  Co.,  Chicago. 

Please  deliver  to  our  teamster:    25  bbls.   Pillsbury  flour,  @  $4;  10  chests  Oolong  tea, 
40  lb.  each,  @  47^;  5  bbls.  apples,  @  $4.50;  and  charge  to  the  account  of 

W.  A.  Crocker  &  Co. 


Order  No.  3875.  Rock  Island,  III.,  January  3,  19.... 

Messrs.   H.  B.  Clay  &  Co.,  Chicago. 

Please  ship  to  us :  5  bbls.  Pillsbury  flour,  @  $4;  1  hhd.  molasses,  100  gal.,  @  50^; 
25  pails  extra  large  mackerel,  @  $2.50;  20  bags  Rio  coffee,  140  lb.  each,  @  26^;  and  charge 
to  the  account  of  ^^^^^^^^^^^  j^    ^    ^^^^^^^  ^  ^^^^ 

"  W.  A.  Crocker  &  Co.  telephoned  for  9  bbls.  English  currants,  350  lb.  each,  @  5^." 

Note.  —  In  the  above  and  all  similar  cases  it  is  assumed  that  the  orders  ai'e  filled. 

"  What  is  the  total  amount  of  the  cash  sales  to-day  ?  "     (Per  cash  sales  checks,  $225.) 
January  4.  —  "  Give  me  a  check  for  $  50  and  charge  it  to  my  account. 
"Send  a  check  for  $350  to  Ducat,  Lyon  &  Co.,  premium  on  insurance. 
"  Give  Wm.  A.  Seymour,  our  traveling  agent,  $  125  in  currency  for  a  mileage  book  and 
expenses. 

"  What  is  the  total  amount  of  the  cash  sales  to-day  ?  "     (Per  cash  sales  checks,  $150.) 
January  5.  —  "  Orders  received :  "  — 

Order  No.  43.  Kansas  City,  Mo.,  January  3,  19.... 

H.  B.  Clay  &  Co.,  Chicago. 

Please  ship  to  us:  1  chest  Young  Hyson  tea,  75  lb.,  @  55^  ;  30  mats  Java  coffee,  100  lb. 
each,  @  32^;  and  charge  to  the  account  of  W    H    Clark  &  Co. 


WHOLESALE   GROCERY  AND  PRODUCE  BUSINESS  113 

Order  No.  47.  Kansas  City,  Mo., January  3, 19.... 

H.  B.   Clay  &  Co.,  Chicago. 

Please  ship  to  us:  25  bbls.  St.  Louis  extra  flour,  @  f  4;  5  bbls.  oatmeal,  @  $6.25;  and 
charge  to  the  account  of  W.  H.   Clark  &  Co. 


Order  No.  973.  Chicago,  January  4,  19. .. . 

H.  B.  Clay  &  Co.,  City. 

Please  deliver  to  us:  5  cases  Royal  Baking  Powder,  @  $5.28;  2  casks  Turkish  prunes, 
1500  lb.  each,  @  8  ^ ;  deduct  15  ^  from  price  of  each,  and  charge  to  the  account  of 

MuEDOCK  Beos.  Co. 

January/  6.  —  "  Give  the  errand  boy  10  cents  for  car  fare. 

"Enter  these  remittances  and  acknowledge  them:  A.  B.  Rider  &  Son's  check  for  $125; 
C.  B.  Frost  &  Co's.  check  for  $80. 

"  What  is  the  total  amount  of  the  cash  sales  to-day  ?  "     (Per  cash  sales  checks,  $  75.) 

January  7.  —  "  Deposit  to-day  $  480. "     (Cks.  $  205,  Cy .  $  275. ) 

"  Pay  this  bill,  75  ^,  for  cartage  on  goods  delivered  to  Murdock  Bros.  Co.  The  cartage 
we  shall  have  to  allow. 

"  What  is  the  total  amount  of  the  cash  sales  to-day?"     (Per  cash  sales  checks,  $135.25.) 

January  8.  —  "  Mrs.  W.  A.  Seymour  is  here  and  wishes  a  check  for  $  25,  which  you  may 
give  her  and  charge  to  Mr.  Seymour's  account. 

"  A.  B.  Rider  &  Son  want  a  duplicate  invoice  of  January  3. 

"  W.  H.  Clark  &  Co.  complain  that  we  have  overcharged  them  25^  per  barrel  on  oat- 
meal shipped  them  January  5.  Look  back  on  the  Sales  Book  and  see  what  we  charged  them. 
You  say  $6.25?  It  should  have  been  $6  according  to  the  price  list.  Make  the  correction 
and  send  them  a  credit  memorandum. 

"  What  is  the  total  amount  of  the  cash  sales  to-day?"     (Per  cash  sales  checks,  $95.80.) 

"Send  out  for  200  two-cent  stamps." 

January  10. — "This  letter  from  W.  A.  Crocker  &  Co.  states  that  they  have  returned 
5  chests  Oolong  tea,  40  lb.  each,  as  defective.  Investigate  and  see  if  they  have  been  returned. 
You  say  they  have  ?     Send  them  a  credit  memorandum. 

"What  is  the  total  amount  of  the  cash  sales  to-day?  "     (Per  cash  sales  checks,  $151.63.) 

January  13. — "A.  B.  Rider  &  Son  mailed  us  this  check  for  $35.50  and  also  their  note 
for  $700,  dated  January  13,  for  30  days,  with  interest  at  the  rate  of  7  ^  per  annum,  payable  at 
the  Rock  Island  Bank,  to  balance  their  account  to  date. 

"Mail  to  W.  A.  Seymour  a  check  for  $50  to  apply  on  his  salary. 

"  Order  received  :  "  — 

Order  No.  825.  Springfield,  III.,  January  11,  19.... 

H.  B.  Clay  &  Co.,  Chicago. 

Please  ship  via  fast  freight :  100  boxes  Cream  cheese,  50  lb.  each  @  16  ^ ;  and  charge  to 
the  account  of  q    ^    pj^^g^  &  q^^ 

"Deposit  to-day  $450."     (Cks.  $35.50,  Cy.  $414.50.) 

"What  is  the  total  amount  of  the  cash  sales  to-day?"     (Per  cash  sales  checks,  $103.50.) 

"  What  is  the  total  amount  of  the  sales  up  to  date  ?  "     ($4512.37.) 

January  20.  —  "  What  is  the  balance  in  bank  ? 

"Write  out  a  check  for  $4000  to  the  order  of  James  H.  Johnson,  New  York,  as  a  loan. 
Here  is  his  judgment  note  for  same,  dated  January  25,  at  30  days,  with  interest  at  10  ^  per 
annum,  payable  at  his  office. 


114  BUSINESS  PRACTICE 

"  Did  you  give  W.  A.  Crocker  &  Co.  credit  for  the  tea  they  returned  January  10  ?  Very 
well.  The  other  day  I  was  examining  the  contents  of  the  different  chests  returned  and  found 
that  coffee  beans  had  been  mixed  with  the  tea.  This  is  probably  the  packer's  fault.  I  will 
write  to  Reid,  Smith  &  Sons  about  it.  The  tea  was  purchased  from  them  some  time  ago. 
I  will  request  the  shipping  clerk  to  see  that  the  five  chests  are  returned  to-day.  Send  them 
a  debit  memorandum,  charging  35^  a  pound,  which  is  the  cost  price. 

"  What  is  the  total  amount  of  the  cash  sales  to-day  ?  "     (Per  cash  sales  checks,  $502.80.) 

January  25.  —  "  Deposit  to-day  %  625  in  currency. 

"  What  is  the  total  amount  of  the  cash  sales  to-day  ?  "     (Per  cash  sales  checks,  I  325.80.) 

Jariuary  29.  —  "  Order  received  :  "  — 

Order  No.  75.  Kansas  City,  Mo.,  January  26,  19.... 

H.  B.  Clay  &  Co.,  Chicago. 

Please  ship  via  fast  freight:  10  bbls.  molasses,  50  gal.  each,  @  49^;  5  bbls.  Pillsbury 
flour,  @  $4;  25  boxes  Ivory  soap,  @  $4.50;  10  boxes  Cream  cheese,  54  lb.  each,  @  IQ^ ; 
and  charge  to  the  account  of  W    H    Clakk  &  Co 

"  What  is  the  total  amount  of  the  cash  sales  to-day  ?  "     (Per  cash  sales  checks,  $  373.60.) 

January '^1.  —  "I  have  been  corresponding  with  A.  B.  Rider  &  Son,  Rock  Island,  in 
reference  to  accepting  some  of  our  goods  on  consignment.  They  reply  that  they  are  quite 
confident  the  articles  will  sell  readily.  Have  the  shipping  clerk  ship  to  A.  B.  Rider  &  Son, 
on  consignment,  100  boxes  Ivory  soap,  @  $4.50,  and  100  chests  Oolong  tea,  40  lb.  each,  @47  ^. 
The  agreement  is  that  the  goods  are  not  to  be  sold  on  commission,  but  to  be  billed  at  our 
regular  prices  as  though  bought  outright.  But  they  are  not  to  be  paid  for  till  A.  B.  Rider 
&  Son  have  sold  them. 

"Mr.  Seymour  writes  that  he  will  need  a  mileage  book  in  a  few  days.  Send  him  a 
check  for  $50. 

"What  is  the  total  amount  of  the  pay  roll?  $525?  See  that  you  have  money  enough 
in  the  drawer  to  pay  off  with.  How  much  currency  is  there  now  in  the  drawer?  $719.03? 
Very  well,  pay  off  the  help. 

"  Give  W.  A.  Seymour  credit  for  salary  at  the  rate  of  $  125  a  month,  beginning 
January  1.     We  partners  each  receive  a  salary  of  $200  a  month. 

"  As  this  is  the  last  day  of  the  month,  begin  to  take  off  statements  so  as  to  have  them 
ready  to  mail  this  evening.     Make  a  list  of  them  before  mailing. 

"  What  is  the  total  amount  of  the  cash  sales  to-day  ?  "     (Per  cash  sales  checks,  $175.50.) 

Note.  —  Journalize  the  invoices  which  were  received  during  the  month.  (See  note  on  page  50.)  Take  off 
a  trial  balance. 

Invoices  received  during  the  Month 

Chicago,  January  4,  19.... 
H.  B.  Clay  &  Co.,  Chicago. 

To  Ducat,  Lyon  &  Co.  Dr. 

Por  premium  on  insurance  as  per  policies  :j|5^  96758,  ^78276, 
#6478,  #4678,  $350.00 

Paid,      . 

Ducat,  Lyon  &  Co. 


Minneapolis,  Minn.,  January  5,  19.... 
H.  B.  Clay  &  Co.,  Chicago. 
Order  No.  1.  Bought  of  Pillsbury  Mill  Co. 

300  bbls.  Pillsbury  flour,  @  $  3.50       $  1050.00 


WHOLESALE  GROCERY  AND  PRODUCE  BUSINESS  115 

New  Yokk,  January  5,  19 

H.  B.  Clay  &  Co.,  Chicago. 

Order  No.  2.  Bought  of  C.  Johnson  &  Co. 

Terms  30  days. 

25  bbls.  W.  C.  sugar,  8250  lb.,  @  4  )Z*  f  330.00 

30  bbls.  N.  0.  molasses,  1500  gal.,  @  38^  570.00 

$  900.00 

Minneapolis,  January  29,  19 

H.  B.  Clay  &  Co.,  Chicago. 

Order  No.  Bought  of  Pillsbury  Mill  Co. 

Terms  30  days. 

250  bbls.  Pillsbury  flour,  @  f  3.50  $875.00 


Chicago,  January  29,  19.... 
H.  B.  Clay  &  Co.,  Chicago. 

Terms  Cash.  Bought  of  Reid,  Smith  &  Sons. 

20  bbls.  vinegar,  1000  gal.,  @  10^  $100.00 

20  chests  Oolong  tea,  800  lb.,  @  35^  280.00 

$380.00 

Chicago,  January  26,  19.... 
H.  B.  Clay  &  Co.,  Chicago. 

Bought  of  Reid,  Smith  &  Sons. 

•      200  boxes  Ivory  soap,  @  $3.50  $700.00 

100  bbls.  Y.  C.  sugar,  30000  lb.,  @        .04  1200.00 

$  1900.00 


Chicago,  January  26,  19.... 
H.  B.  Clay  &  Co.,  Chicago. 

Order  No.  7.  Bought  of  C.  H.  Odell  &  Co. 

2  Curtain  Top  desks,                                                    @  $25.00  $50.00 

2  chairs,                                                                             @      10.00  20.00 

$70.00 

Chicago,  January  26,  19.... 
H.  B.  Clay  &  Co.,  Chicago. 

To  Chicago  Gas  Lt.  &  Coke  Co.  Dr. 

Gas  from  January  1  to  January  26  $  48.50 

Less  20%  9.70     $38.80 


Chicago,  January  1,  19.... 
H.  B.  Clay  &  Co.,  Chicago. 

To  The  Chicago  Telephone  Co.  Dr. 
Rent  of  telephone  No. from  January  1  to  April  1,  $37.50 

Manager's  Instructions  to  his  Bookkeeper 

February  1.  —  "  What  is  the  balance  in  bank  ? 

"Mail  the  Pillsbury  Mill  Co.  a  check  for  $500  to  apply  on  account. 

"Send  a  check  for  $70  to  C.   H.  Odell  &  Co.  to  balance  our  account. 

"  What  is  the  balance  we  owe  Reid,  Smith  &  Sons  according  to  our  books  ?  $  2210  ? 
Give  them  a  check  for  8410,  and  two  notes  for  $900  each;  one  for  15  days  and  the  other 
for  30  days.     Date  them  to-day  and  have  them  payable  at  our  office. 


116  BUSINESS  PRACTICE 

"Mr.  Seymour  returned  this  afternoon  and  left  his  expense  book  for  January.  Give 
him  credit  for  it." 

(Explanation)     Sundry  items  $  75.50 

Mileage  No.  33375,  2000  miles,            @  2^  40.00 

Mileage  No.  36287,  350  miles,             @  2^  7.00 

Total  expenses  for  January  122.50 

"What  is  the  total  amount  of  the  cash  sales  to-day  ?  "     (Per  cash  sales  checks,  I  237.50.) 

February/  3.  —  "  What  is  the  total  amount  of  the  cash  sales  to-day  ?  "  (Per  cash  sales 
checks,  $133.95.) 

February  5.  — "  Let  me  see  the  cash  balance  sheet.  You  say  you  had  not  finished 
because  the  cash  is  short  $13.50?  Then  do  not  lose  any  more  time,  but  charge  the  amount 
to  Suspense  account.     Should  you  find  it  you  can  credit  this  account. 

"  Deposit  to-day  $  550  in  currency. 

"  Order  received  :  "  — 

Order  No.  855.  Springfield,  III.,  February  4,  19.... 

H.  B.   Clay  &  Co.,  Chicago. 

Please  ship  via  the  C.   &  A.   R.R. :  10  bbls.  St.  Louis  flour,  @  $4,  and  charge  to  the 

^^c«^°^  «^  C.  B.  Frost  &  Co. 

"  What  is  the  total  amount  of  the  cash  sales  to-day  ?  "     (Per  cash  sales  checks,  $102.50.) 

"  Have  you  paid  the  gas  bill  ?     No  ?     Then  do  it  to-day  by  check." 

February  7.  —  "  These  remittances  came  in  this  morning :  A.  B.  Rider  &  Son's  check  for 
$100;  C.  B.  Frost  &  Co's.  check  for  $325;  W.  A.  Crocker  &  Co's.  check  for  $57.50,  and 
also  their  note  for  $  100,  dated  February  5,  for  30  days,  at  7  ^  interest,  payable  at  the  Third 
National  Bank,  to  balance  invoice  of  January  3.  Before  entering  remittances  always  examine 
the  accounts  to  see  if  their  amounts  correspond. 

"Do  not  forget  to  make  a  deposit  to-day.  Deposit  all  the  currency  but  $25."  (Cks. 
$482.50,  Cy.  $254.98.) 

"  What  is  the  total  amount  of  the  cash  sales  to-day  ?  "     (Per  cash  sales  checks,  $96.35.) 

February  8. — "Pay  this  bill  of  S.  E.  Sweet  &  Co.,  horseshoeing,  $9.75;  write  out  a 
check  for  the  amount. 

"  Mail  a  check  to-day  for  the  telephone  bill. 

"  Give  the  errand  boy  50  cents  for  car  fare. 

"  Let  me  have  $5  for  five  tickets  for  the  Letter  Carriers'  Ball. 

"  What  is  the  balance  in  bank  ?  Did  you  leave  the  Deposit  Book  at  the  bank  last  month 
to  be  balanced  ?     No?     Then  do  it  to-day."     (See  page  120.) 

"Telephone  to  W.  A.  Crocker  &  Co.  to  ship,  via  fast  freight,  20  bbls.  apples  to 
C.  B.  Frost  &  Co.,  Springfield,  111.,  and  charge  to  our  account.  Tell  them  to  be  sure  to 
ship  to-day.     Charge  the  apples  to  C.  B.  Frost  &  Co.,  at  $5.75  a  barrel. 

"  What  is  the  total  amount  of  the  cash  sales  to-day  ?  "     (Per  cash  sales  checks,  $  107.50.) 

February  10.  — "  This  letter  and  statement  are  from  A.  B,  Rider  &  Son,  stating  that  they 
have  sold  100  boxes  Ivory  soap  and  100  chests  of  Oolong  tea,  closing  out  the  consignment 
shipped  them  January  31.  Make  entry  for  same.  (Credit  the  consignment  account  and  debit 
A.  B.  Rider  &  Son's  regular  account.) 

"  Give  Mr.  Seymour  credit  for  the  remaining  number  of  miles  on  this  mileage  book. 
No.  36287,  C.  M.  &  St.  P.  R.R.;  then  place  the  book  in  the  safe  until  needed." 

(Explanation)     Mileage  book  No.  36287  returned 

1650  miles,  @2^  $33.00 

Rebate  cover,  10.00        1 43.00 


WHOLESALE   GROCERY  AND  PRODUCE  BUSINESS  117 

"  Is  there  $  150  in  currency  in  the  cash  drawer  ?  Yes  ?  Then  give  Mr.  Seymour  $  60  for 
a  mileage  book  on  the  C.  R.  I.  &  P.  R.R.,  and  $100  for  expenses. 

"  Let  me  see  the  trial  balance.  What  about  C.  H.  Miller  &  Go's,  account  ?  Are  they 
owing  us  i  300  ?  Turn  to  the  Ledger  and  let  me  see  their  account.  This  account  does  not 
show  all  that  it  should ;  please  ascertain  what  is  wrong,  and  make  the  proper  entry.  Always 
study  every  account  before  taking  a  trial  balance,  and  see  that  each  one  shows  its  correct 
balance.     Always  make  all  the  entries  that  are  required  for  any  transaction. 

"How  much  was  the  cash  short  the  other  day?  $13.50?  Charge  $10  of  it  to  my 
account.  I  recollect  taking  it  from  the  cash  drawer  while  you  were  out  at  luncheon,  but 
failed  to  make  a  ticket  for  it. 

"  What  is  the  total  amount  of  the  cash  sales  to-day  ?  "     (Per  cash  sales  checks,  $  385. 90.) 

February  11.  — -"Enter  this  check,  $214.34.  It  is  from  W.  A.  Crocker  &  Co.,  to  balance 
account;  less  If)  for  cash,  $2.16.  Give  them  credit  for  amount  of  check,  and  write  that  we 
can  not  allow  them  1  f)  discount,  as  the  account  is  long  past  due. 

"  Have  you  checked  the  bank  account  ?     Let  me  see  the  memorandum. 

"  Orders  received :  "  — 

Order  No.  200.  Chicago,  February  11, 19.... 

H.  B.  Clay  &  Co. 

Please  deliver  to  our  teamster :  15  bbls,  Pillsbury  flour,  @  $  4 ;  10  boxes  Ivory  soap, 
@$4.50;  and  charge  to  the  account  of  ^y_  j^    Ckocker  &  Co. 


Order  No.  865.  Springfield,  III.,  February  10,  19.... 

H.  B.  Clay  &  Co.,  Chicago. 

Please  ship  via  the  C.  &  A.  R.R. :  3  bbls.  molasses,  50  gal.  each,  @  50  ^ ;  5  bbls.  Pillsbury 
flour,  @.  $  4 ;  and  charge  to  the  account  of  C    B    Frost  &  Co 


"  Here  is  A.  B.  Rider  &  Son's  check  for  $700  with  which  to  pay  their  note  due  to-morrow. 
Was  their  note  interest-bearing  ?  Yes  ?  Then  charge  their  account  with  the  interest  ($  4.08) 
and  send  them  a  bill.     At  the  same  time  write  them  that  the  interest  has  been  omitted. 

'^Deposit  to-day  $1714.34."     (Cks.  $914.34,  Cy.  $800.) 

"What  is  the  total  amount  of  the  cash  sales  to-day  ?  "     (Per  cash  sales  checks,  $350.75.) 

February  14.  —  "  Let  me  see  the  list  of  the  statements  you  sent  out  the  first  of  the  month. 
I  see  that  you  have  not  been  checking  the  names  and  amounts  as  they  are  paid.  Hereafter 
please  see  that  this  is  attended  to  every  morning. 

"  Deposit  to-day  $  225  in  currency. 

"  The  firm  has  purchased  to-day  from  C.  H.  Harris  &  Co.  36  shares  Michigan  Central 
Railroad  stock,  at  $115  a  share.  Write  out  a  check  for  the  amount  ($4140)  to  the  order  of 
C.  H.  Harris  &  Co. 

"  What  is  the  total  amount  of  the  cash  sales  to-day  ?  "     (Per  cash  sales  checks,  $600.69.) 

February  15.  —  "  Give  the  errand  boy  $  60  in  currency,  and  have  him  purchase  500  two- 
cent  stamps,  and  also  5000  one-cent  stamps  for  the  circulars.  To  which  account  have  you 
been  charging  postage  stamps  ?  Expense  account  ?  That  is  correct ;  however,  I  want  a 
Postage  account,  so  as  to  enable  us  to  know  how  much  we  pay  a  year  for  stamps.  Transfer 
to  Postage  account  what  you  have  already  charged  to  Expense  account. 

"  Write  out  a  check  for  $26.50  in  favor  of  the  Michigan  Central  Railroad  Co.  for  freight 
charges  on  shipment  from  C.  Johnson  &  Co.  Hand  this  check  with  the  freight  notice  to  the 
teamster,  and  have  him  deliver  the  goods  to  us. 

"  Enter  this  check  from  W.  H.  Clark  &  Co.  in  settlement  of  invoice  January  29,  as  stated 
in  their  letter."     (Check  amount,  $459.27 ;  1^  discount,  $4.63  ;  invoice  amount,  $463.90.) 


118  BUSINESS  PRACTICE 

"  When  did  this  notice  come  in  ?  " 


THIRD   NATIONAL 

BANK 

Dearborn  Street. 

Chicago 

,  Feb. 

13, 

19__-. 

H.  B. 

CLAY  &  Co. 

Your 

Paper  for  $900.00  matures 

on  February 

16. 

C.  B.  Harrison, 

Cashier. 

Checks  Presented  in  Payment  must  be  certified. 

Banking  hours : 
Saturdays, 

10  A.M 
9  A.M 

to    3  P.M. 
to  12  M. 

"  I  see  it  is  from  the  Third  National  Bank  to  take  up  our  note  for  -$  900  which  we  gave  to 
Reid,  Smith  &  Sons. 

"  What  is  the  balance  in  bank  ?  "     ($  114.27.) 

"  Do  not  fail  to  deposit  to-day  W.  H.  Clark  &  Go's,  check  and  $238.50  in  currency. 

"What  is  the  total  amount  of  the  cash  sales  to-day?"     (Per  cash  sales  checks,  $96.75.) 

February  16.  —  "  What  bank  is  holding  our  note,  $900,  which  is  due  to-day  ?  Write  out 
a  check  for  the  amount  to  the  order  of  that  bank,  and  I  will  sign  it.  Should  the  bank  mes- 
senger come  in  while  I  am  out  you  may  pay  the  note. 

"  Has  the  bank  messenger  been  in  ?  No  ?  That  is  strange  !  It  is  now  2:30,  so  you  had 
better  take  the  check  with  the  notice  to  the  bank  and  pay  the  note.  By  the  way,  do  not  for- 
get to  have  the  check  certified. 

"What  is  the  total  amount  of  the  cash  sales  to-day?"     (Per  cash  sales  checks,  $131.50.) 

February  17.  — "  What  is  the  balance  in  bank  ?  Overdrawn  $87.96  ?  And  did  the  bank 
certify  our  check  yesterday  for  $  900  ?     Yes  ?     Well,  some  checks  must  still  be  out. 

"  Deposit  this  morning  $100  in  currency  to  cover  the  overdraft  of  yesterday." 

February  23.  —  "  While  you  were  at  luncheon  the  messenger  from  the  Students'  National 
Bank  called  and  presented  for  acceptance  a  draft  for  $  292.50  drawn  on  us  by  C.  Johnson  &  Co. 
in  favor  of  the  New  York  National  Bank.  I  have  accepted  it,  so  make  the  entry  for  it.  The 
draft  was  at  five  days'  sight. 

"Enter  this  check,  $33.32,  of  James  H.  Johnson  in  settlement  of  the  interest  on  his 
note,  due  to-morrow.  He  wishes  the  note  renewed  and  has  inclosed  to  us  this  judgment  note, 
$4000,  dated  February  21,  at  30  days,  with  interest  at  10%  per  annum,  payable  at  the 
Fifth  National  Bank,  New  York.     Give  hiin  credit  for  the  new  note  and  return  the  old  one. 

"Send  Mrs.  W.  A.  Seymour  a  check  for  $150. 

"  What  is  the  total  amount  of  the  cash  sales  to-day  ?  "     (Per  cash  sales  checks,  $249.50.) 

February  28.  — "  What  paper  do  we  have  to  meet  to-day  ?  What  is  the  balance  in 
bank?  Overdrawn  $137.96?  Since  when?  Why  did  you  not  call  my  attention  to  the 
matter  at  the  time  ?  It  brings  us  '  pretty  close  to  shore,'  having  to  meet  to-day  a  pay  roll 
of  about  $  1000  and  a  draft  for  $  292.50.  How  do  you  expect  me  to  make  arrangements  to 
pay  all  that  to-day  ? 

"  Let  me  have  the  collector's  book.  Give  the  collector  a  statement  of  Murdock  Bros. 
Co.'s  account  and  have  him  collect  it.  Hereafter  do  not  wait  for  me  to  ask  you  what 
notes  are  becoming  due,  but  keep  me  informed  from  day  to  day.  Look  over  the  Bill  Book 
every  morning,  and  about  ten  days  before  a  note  falls  due  tell  me  about  it,  and  again  two 


WHOLESALE   GROCERY  AND  PRODUCE  BUSINESS  119 

days  previous  to  its  maturity.  I  want  you  to  take  as  much  interest  in  this  business  as  if 
it  were  your  own,  and  you  were  managing  it  for  yourself.  Whenever  you  see  that  I  over- 
look or  neglect  certain  transactions  or  accounts,  or  that  I  fail  to  ask  you  questions  of  impor- 
tance, I  want  you  to  come  and  tell  me  about  them. 

"  Has  the  collector  returned  ?  How  much  did  he  collect  ?  $  200  ?  Very  well.  Give 
Murdock  Bros.  Co.  credit  for  the  amount  of  the  check,  and  then  prepare  the  deposit.  De- 
posit all  the  checks  you  have  in  the  safe  ($233.32),  leaving  the  currency  for  the  pay 
roll.  What  is  the  total  amount  of  the  pay  roll  ?  f  750  ?  How  much  currency  have  you 
in  the  cash  drawer?  $464.94?  Use  $450  of  it  for  the  pay  roll.  Now  what  amount 
will  you  still  require  to  pay  the  help  and  take  up  the  draft?  $497.14?  Then  wait  until 
11:30  before  making  a  deposit.  In  the  meantime  I  will  go  to  the  bank  and  see  if  they 
will  discount  our  note  for  $  1000  payable  in  30  days.  While  I  am  gone  you  may  write  out 
the  check  to  pay  the  draft,  $292.50,  and  also  write  out  one  for  'Currency'  ($300)  to 
cover  the  pay  roll. 

"  I  called  at  the  bank  and  they  discounted  our  note,  $  1000,  payable  in  30  days,  charging 
7  %  discount  ($5.83).  You  may  now  go  to  the  bank,  and  when  you  have  deposited,  ask  the 
discount  clerk  to  enter  on  our  Deposit  Book  the  proceeds  of  the  note  I  had  discounted 
about  an  hour  ago.  Then  stop  at  the  note  teller's  window,  pay  the  draft,  and  have  the 
check  cashed  at  the  paying  teller's  window. 

"  Pay  off  the  help  about  4  o'clock. 

"What  is  the  total  amount  of  the  cash  sales  to-day?"     (Per  cash  sales  checks,  $102.68.) 

"  This  is  Mr,   Seymour's  expense  book  for  February  :  "  — 

(Explanation)     Sundry  items  $55.60 
Mileage  book  No.  C  3546, 

Used  1500  miles,  @  2  ^                     30.00 

Total  expenses  for  February  $  85.50 

"As  this  is  the  last  day  of  the  month,  see  that  all  the  invoices  are  O.  K.'d.  and  then 
enter  them.     Leave  the  Deposit  Book  at  the  bank  to  be  balanced."     (See  page  120.) 

Note.  —  Make  entries  for  the  salaries,  rent,  etc.     Take  off  trial  balance. 

"  This  is  the  month  for  closing  our  books.  Have  the  men  in  the  different  departments 
stay  and  take  an  inventory."     (See  inventories  on  the  next  page.) 

Invoices  received  during  the  Month 

Chicago,  February  5,  19.... 
H.  B.  Clay  &  Co.,  City. 

To  S.  E.  Sweet  &  Co.  Dr. 
For  horseshoeing  $9.75 

Paid, 

S.  E.  Sweet  &  Co. 


New  York,  February  17,  19.... 
H.  B.  Clay  &  Co.,  Chicago. 

Bought  of  C.  Johnson  &  Co. 
20  bbls.  Standard  A  sugar,  6500  lb.  @  .04^  $292.50 


Chicago,  February  28,  19.... 
H.  B.  Clay  &  Co.,  City. 

To  Chicago  Gas  Lt.  &  Coke  Co.  Dr. 
Gas  from  January  26  to  February  26,  $47.65 

Less  20%  9.53    $38.12 


120 


BUSINESS  PRACTICE 


19. 


Jan. 


Feb. 


Feb. 


New  York,  January  17,  19.... 
H.  B.  Clay  &  Co.,  Chicago. 

Bought  of  C.  Johnson  &  Co. 

12  hhds.  N.  0.  molasses,  1200  gallons,  @  38^  $456.00 


H.  B.  Clay  &  Co.,  City. 

Bought  of  W.  A.  Crocker  &  Co. 

20  bbls.  apples,  @  $3.85 

Shipped  to  C.  B.  Frost  &  Co.,  Springfield,  111. 


Chicago,  February  8,  19.... 
f  77.00 


H.  B.  Clay  &  Co.,  City. 


Chicago,  February  10,  19.. 


Bought    of   PiLLSBURY    MiLL    Co. 


20  bbls.  Pillsbury  flour, 

Merchandise       .... 

Mileage 

Postage  ..... 
Horses  and  Wagons  .  ... 
Furniture  and  Fixtures  . 
Insurance  (unexpired  premium) 
Interest  accumulated  on  notes  . 
Michigan  Central  R.E.  Stock  . 


@  $3.50 


Inventories 


$  70.00 

$  5575.50 

43.00 

15.00 

1450.00 

1500.00 

291.70 

8.23 

4140.00 


Deposit  Book  Balanced 


Deposits 


3 

7 
13 
25 

5 

7 


Deposit, 


9 

Balance, 

11 

Deposit, 

14 

15 

17 

28 
28 

1000.00 
fi.83 

5500 
480 
450 
625 
550 
737 


8342 


2421 
1714 

225 
697 
100 
233 
994 


6385 


00 
00 
00 
00 
00 
48 


48 


18 
34 
00 

77 
00 
32 
17 


78 


Returnkd  Checks 

50 

00 

25 

00 

35 

00 

4000 

00 

25 

00 

50 

00 

300 

00 

50 

00 

350 

00 

500 

00 

50 

00 

38 

80 

410 

00 

37 

50 

5921 

30 

Balan 
4140 

ce 
00 

2421 

18 

(red  ink) 

8342 

48 

26 

50 

900 

00 

150 

00 

292 

50 

300 

00 

70 

00 

5879 

00 

506 

78 

Balan 

ce 

(red  ink) 

6385 

78 

Note. —  See  direction  to  the  teacher  on  page  55. 

February  9,  checks,  #12,  — $70.00,  #15,  — f 
February  28,  check,  #15,  — $9.75,  still  out. 


).75,  still  out. 


COMMISSION 


121 


QUESTIONS   FOR   DISCUSSION 

1.  In  what  accounts  will  the  falling  off  of  a  business  first  be  likely  to  manifest  itself?  2.  What  accounts 
would  you  study  in  order  to  gain  an  idea  of  the  prosperity  of  a  business?  What  books  of  record  would  you 
consult?  3.  How  from  Ledger  accounts  could  you  gain  an  idea  as  to  a  customer's  business  character?  4.  Can 
a  Merchandise  account  show  no  sales  during  the  year  and  yet  close  with  a  gain?  5.  Of  what  value  is  a  Book- 
keeping account?  What  use  can  a  business  man  make  of  it?  6.  A  merchant,  keeping  separate  purchase  accounts 
for  diffei'ent  classes  of  goods,  returns  to  the  manufacturer  an  invoice  of  one  class,  and  exchanges  for  another  class. 
What  are  the  possible  entries?  7.  How  can  you  calculate  the  rate  of  gain  or  loss  on  a  Merchandise  or  other 
representative  account  ?  8.  How  can  you  decide  —  from  any  record  books  or  papers  —  as  to  which  of  two  classes 
of  merchandise  is  producing  the  greater  per  cent  of  profit?  9.  What  is  meant  by  the  good  will  of  a  firm  or 
corporation?  Under  what  classification  would  its  balance  be  entered  if  the  account  were  on  the  Ledger?  When 
is  the  account  of  no  value?  10.  A  piano  house  sells  a  piano  for  $500,  to  be  paid  for  in  installments  of  $50  per 
month,  with  six  per  cent  interest.  Give  all  the  entries  for  the  transaction,  including  the  payments.  11.  Define 
an  inventory.  12.  How  would  you  obey  an  order  to  "take  an  inventory"  of  a  certain  stock?  13.  If  you  know 
the  quantity  of  an  article  bought,  and  the  quantity  sold,  is  it  safe  to  take  the  difference  as  the  quantity  in  inventory  ? 
Can  you  make  a  true  inventory  from  your  books  alone  ?  14.  Can  you  give  any  reasons  against  taking  the  "  cost " 
of  certain  articles  —  as  shown  by  the  record  books  —  as  the  inventory  value?  15.  What  determines  inventory 
values?  16.  Suggest  methods  of  using  the  Ledger  system  for  keeping  a  continuous  inventory  record  of  certaiii 
articles  of  merchandise.  17.  After  inventories  have  been  entered,  and  the  books  closed  and  reopened,  a  discovery 
is  made  of  certain  merchandise  which,  by  mistake,  was  not  inventoried.     What  should  be  done? 


SECTION  II.    COMMISSION 

192.  A  Commission  Merchant  is  one  who  sells  goods  for  another,  and  receives  for  his  serv- 
ices a  certain  per  cent  of  the  selling  price,  or  a  certain  sum  per  unit  of  quantity,  called  "  com- 
mission."    (See  Account  Sales,  page  99.) 

193.  The  following  set  of  books  can  be  used  in  almost  apy  produce  commission  house  :  — 

Auxiliary  Books :  Order  Book,  Receiving  Book,  Shipping  Book,  Invoice  Book,  Petty  Cash 
Book,  Deposit  Book,  Check  Books,  Bill  Book,  Checking  Book,  Account  Sales  Book. 
Books  of  Entry :  Account  Sales  Journal,  Sales  Book,  Cash  Book,  Journal,  Ledger. 

,  194.    The  Checking  Book  is  written  up  from  the  Receiving  Book  and  Sales  tickets,  so  as  to 
show  when  a  consignment  is  "closed  out." 

Checking  Book 


Lot  JYo.  /. 

Received,   /O  6-6-tay,  ^^a/^a^  oAtcl 

Freight,   f3./6.  Cartage,  ^0^. 


Consignor,   <S^u^n^   If   ofcyyv, 
£^.  Address,   ofke^^tfcfcuK,   ^cc/. 


HOW   SOLD 


{>4)-tay.  (^'boM' 


@      3.26 


Note.  —  The  Lot  number  is  the  number  given  a  consignment  when  it  is  entered  in  the  Receiving  Book. 


122 


BUSINESS  PRACTICE 


196.  The  Account  Sales  Book  is  written  up  from  the  Checking  Book,  and  constitutes  a 
record  of  each  consignment  after  it  is  closed  out. 

Its  leaves  are  usually  perforated  so  that  the  account  sales  on  the  right-hand  side  of  the 
page  can  be  easily  torn  out  and  sent  to  the  consignors.  Every  account  sales  rendered  should 
be  an  exact  copy  of  the  stub  in  this  book.  The  book  consists  simply  of  a  number  of  forms  for 
account  sales  (page  99)  printed  on  the  right-hand  pages. 

Account  Sales  Book 


A.   M.   CHASE   &  CO. 

A.   M.   CHASE   &   CO. 

Sales  No.  1.                      Chicago,  Oct.  22,  1901. 

Sales  No.  1.                     Chicago,  Oct.  22,  1901. 

Lot  No.  1. 

Lot  No.  1. 

Account  Sales 

Account  Sales 

Of  10  bbls.  Crabs  and  Apples 

Of  10  bbls.  Crabs  and  Apples 

For  Frank  &  Son, 

For  Frank  &  Son, 

Sheboygan,  Wis. 

Sheboygan,  Wis. 

Received  Oct.  19,  1901. 

Received  Oct.  19,  1901. 

9 

bbls.  Crab  Apples,       $4.00 

36 

00 

9 

bbls.  Crab  Apples,       $4.00 

36 

00 

1 

"    Apples,                     3.25 

3 

25 

39 

25 

1 

"    Apples,                    3.26 

3 

25 

39 

25 

Charges, 

Charges, 

Freight,  3.15.     Ctg.,  .40 

3 

55 

Freight,  3.15.     Ctg.,. 40 

3 

55 

Commission,  10% 
Net  Proceeds, 

3 

93 

7 

48 

Commission,  10% 
Net  Proceeds, 

3 

93 

7 

48 

31 

77 

31 

77 

A.   M.   CHASE  &   CO. 

A.   M.   CHASE   &   CO. 

Sales  No.                            Chicago, 

Sales  No.                          Chicago, 

Lot  No. 

Lot  No. 

Account  Sales 

Account  Sales 

Of 

Of 

For 

For 

Received 

Received 

Charges, 

Charges, 

Freight,       '     Ctg., 

Freight,            Ctg., 

Commission, 

Net  Proceeds, 

Commission, 

Net  Proceeds, 

' 

1 

196.  When  an  account  sales  is  rendered  with  no  check  for  the  net  proceeds  accompany- 
ing it,  the  account  sales  should  be  journalized  in  the  regular  Journal  by  debiting  Merchandise 
account  with  the  gross  amount,  crediting  Freight  and  Cartage  account  and  Commission 
account  with  their  respective  amounts,  and  crediting  the  consignor's  account  with  the  net 
proceeds. 


COMMISSION 


123 


197.  The  Account  Sales  Journal  is  used  only  for  journalizing  such  account  sales  as  have 
checks  for  the  net  proceeds  sent  with  them.  This  journal  differs  materially  from  the  regular 
Journal,  and  its  object  is  to  save  work.  Accounts  are  opened  with  the  banks  on  which  checks 
have  been  drawn,  for  the  net  proceeds,  instead  of  with  each  consignor,  and  instead  of  the  usual 
order  of  entries,  the  entries  are  distributed  among  as  many  pages  as  there  are  different  banks 
drawn  on. 

This  book  is  ruled  with  columns  as  follows  :  Date  (of  account  sales),  Sales  No.  (number 
in  Account  Sales  Book),  Account  of  (name  of  consignor),  Check  No.  (on  bank),  Mdse.  (Gross 
Amount),  Freight  and  Cartage,  Commission,  Net  Proceeds,  and  Deposits.  The  Deposit  col- 
umn is  for  convenience  only. 

The  Mdse.,  Freight  and  Cartage,  Commission,  and  Net  Proceeds  columns  are  added  up 
and  posted  once  a  month  from  an  entry  in  this  journal.  Debit  Merchandise  account  with  the 
gross  sales,  credit  Freight  and  Cartage  and  Commission  with  their  respective  amounts,  and 
credit  the  net  proceeds  to  the  bank  whose  name  is  at  the  head  of  the  page. 

Note. — Merchandise  account  is  debited  from  the  Account  Sales  Journal  because  the  value  of  the  goods 
received  to  be  sold  on  commission  is  ascertained  only  as  the  consignments  are  sold  out.  Merchandise  and  Sales 
accounts  show  no  profit  or  loss,  as  their  balances  offset  each  other. 

Account  Sales  Journal 
New  Haven  City  Bank,  New  Haven,  Mich. 


Account 
Sales 
No. 

Account  of 

Check 
No. 

Mdse. 

Freight 

Bank 

1902 

Gross 
Sales 

and 
Cartage 

Commission 

Net 
Proceeds 

(red  Ink) 

Sept. 

1 

2 
2 
4 
4 
4 

579 
580 
583 
599 
605 
610 

W.  D.  Brown,  New  Haven 
Shea  &  Wells,  New  Haven 
M.  B.  Wayne,  Grand  Haven 
C.  C.  Phillip.s,  Grand  Haven 
M.  B.  Baker,  New  Haven 
G.  L.  Kent,  New  Haven 

85 
86 
87 
88 
89 
90 

75 
65 

37 
45 
39 
24 

92 

08 
55 

55 
33 

75 

7 
8 
5 
4 
3 
3 

50 
90 
75 
40 

75 
00 

7  59 
6  50 

60 
49 
29 
36 
31 
20 

83 
68 
92 
59 
65 
52 

276 
200 

50 
00 

1 
4 
3 
1 

88 
56 
93 
23 

476 
229 

50 

Mdse.   Sundries 

Freight  and  Cartage 

Commission 

New  Haven  City  Bank 

288 

18 

45i 

33 

30 

671 

25 

69 

951 

229 

19 

19 

1251 

247 

SI 

(red  ink) 

SET   II.     EXERCISES 

General  Instructions.  —  Books  required :  Deposit  Book,  Check  Books  (Chicago  and 
Sheboygan),  Bill  Book,  Account  Sales  Book,  Sales  Book,  Cash  Book,  Journal,  Account  Sales 
Journal,  Ledger. 

The  student  may  rule  his  own  Account  Sales  Book  and  Account  Sales  Journal  according 
to  the  specimen  pages  (see  page  122  and  above).  The  Account  Sales  Book  requires  six  pages, 
and  the  Account  Sales  Journal  two  pages. 

The  money  columns  in  the  Cash  Book  are  to  be  headed  as  follows  :  Debit  side  —  "  Sales  " 
and  "  Sundries."     Credit  side — ■"  Freight  and  Cartage"  and  "Sundries." 

Representative  accounts  used:  Bills  Payable,  Bills  Receivable,  Cash,  Commission,  Expense, 

1  Ledger  page. 


124 


BUSINESS  PRACTICE 


Freight  and  Cartage,  Furniture  and  Fixtures,  Horses  and  Wagons,  Interest  and  Discount, 
Loss  and  Gain,  Merchandise,  Mileage,  Rent,  Salary,  Sales,  Traveling  Expense,  Wheat. 

The  Check  Book  of  the  Sheboygan  Bank  is  used  only  for  remitting  net  proceeds  to  con- 
signors.    On  the  stub  write  the  date,  name  of  consignor,  address,  sales  number,  and  the  amount. 

The  Petty  Cash  Book  entries  in  the  exercises  are  to  be  transferred  immediately  to  the 
Cash  Book.  The  "Balance  $10.00"  is  not  to  be  entered,  as  that  amount  is  to  remain  in  the 
cash  drawer. 

The  Account  Sales  Book  should  be  written  up  from  the  Checking  Book  shown  in  the 
exercises. 

The  name  of  the  firm  is  A.  M.  Chase  &  Co.  There  are  two  partners,  A.  M.  Chase  and 
E.  E.  Fish.  A.  M.  Chase  is  to  be  the  manager  and  receive  a  salary  of  f  250  a  month,  and 
E.  E.  Fish,  who  is  to  devote  only  a  portion  of  his  time  to  the  business,  is  to  receive  a  salary  of 
$100  a  month.  A.  M.  Chase  is  to  have  75^  of  the  net  profit  or  loss,  and  E.  E.  Fish  is  to 
have  25  f). 

Manager's  Instructions  to  his  Bookkeeper 

Chicago,  October  15,  19 —  "As  shown  by  the  contract,  we  partners  invest  as  follows: 

A.  M.  Chase  invests  cash,  $2500;  horses  and  wagons  (per  inventory),  $1500;  and  furni- 
ture and  fixtures  (per  inventory),  $500.  E.  E.  Fish  invests  cash,  $500,  and  his  promissory 
note  for  $1000,  dated  October  15,  at  3  months,  payable  at  the  Sixth  National  Bank. 

"Deposit  to-day  $3000. 

"  Write  out  a  check  for  $  50  to  the  order  of  currency  for  the  cash  drawer.  Give  the 
cashier  $10  of  it  for  her  cash  drawer,  and  charge  it  to  her." 

October  17.  —  "  Pay  this  bill  for  stencils,^  $15,  in  currency. 

"Give  Wm.  H.  Bennett,  our  traveling  agent,  $150  in  currency;  $50  of  it  is  for  a  mileage 
book,  and  $  100  for  expenses.  As  there  is  not  money  sufficient  in  the  drawer,  write  out  a  check 
for  the  amount,  and  have  it  cashed  at  the  bank.     Mr.  Bennett  will  go  out  on  the  road  to-night. 

"Pay  this  bill  of  $13.50,  by  check,  to  Wells,  Smith  &  Co.  for  stationery. 

"  Send  a  check  for  $  65  to  the  Diebold  Safe  Co.  for  a  safe  we  bought  yesterday. 

"Pay  this  carpenter's  bill,  $4.50,  in  currency. 

"  Let  me  have  a  check  for  $  75  and  charge  it  to  my  account." 

October  19.  —  "  Give  me  $3  ;  it  is  for  the  Newsboys'  Home. 

"  Send  a  check  for  $  125  to  H.  O.  Sweet  &  Co.  for  October  rent. 

"  Mail  a  check  for  $  1000  to  the  Sheboygan  Bank,  Sheboygan,  Wis.,  to  be  deposited  to  our 
account. 

"  Here  is  the  cashier's  cash  book  and  the  money.  Copy  her  cash  book  and  then  return  it 
to  her."     (See  general  instruction,  above.) 

Petty  Cash  Book 


Dr. 

Cr. 

Exp. 

Frt. 

Ctg. 

Oct.  19,  Balance 

lO'.OO 

Oct.  19,  Frank  &  Son 

3.15 

.40 

Oct.  19,  Cash  sales 

93.50 

Oct.  19,  Kent  &  Smith 

3.71 

.74 

• 

Oct.  19,  C.  B.  Williams 

6.30 

.50 

Oct.  19,  Car  fare 

.50 

Oct.  19,  Two  suppers 

1.20 

1  Stencil.  — A  piece  of  brass,  given  to  a  shipper,  used  in  painting  on  his  boxes  and  barrels  the  number  which  is 
cut  in  the  stencil.    This  is  done  so  that  the  merchant  can  identify  the  goods  as  they  are  received. 


COMMISSION 


125 


"Orders  received:  Auditorium  Hotel,  City,  5  bbls.  apples;  charge  $4.50  a  barrel. 
D.  W.  Kayhill,  Oak  Park,  111.,  9  bbls.  apples  @  14. 

"  What  is  the  balance  in  bank  ?  " 

October  22,  —  "  Send  for  the  Checking  Book  and  render  account  sales  to  those  whose  consign- 
ments are  closed  out.     Charge  10^  commission  on  apples.     Mail  checks  with  the  account  sales." 


Checking  Book 


October  19,  19.-. 

FRANK 

&   SON 

Lot  No.  1. 
Frt.  3.15.     Ctg. 

40^. 

Sheboygan,  Wis. 

10  barrels 

Crabs  and  Apples 

9  barrels 

Crab  Apples 

@$4.00 

36.00 

1  barrel 

Apples 

@     3.25 

3.25 

10 

39.25 

KENT  & 

SMITH 

Lot  No.  2 
Frt.  3.71.     Ctg. 

74^ 

Sheboygan,  Wis. 

13  barrels 

Apples 

5  barrels 

Apples 

@  f  4.50 

22.50 

1  barrel 

Apples 

@     4.00 

4.00 

4  barrels 

Apples 

@     3.75 

15.00 

3  barrels 

Apples 

@     3.25 

9.75 

13 

51.25 

C.   B.  WILLIAMS 

Lot  No.  3 

Frt.  6.30.     Ctg. 

50^ 

Sheboygan,  Wis. 

20  barrels 

Apples 

6  barrels 

Apples 

@  $4.00 

24.00 

8  barrels 

Apples 

@     3.00 

24.00 

3  barrels 

Apples 

@     2.50 

7.50 

3  barrels 

Apples 

@     2.00 

6.00 

20 

61.50 

Petty  Cash  Book 


Dr. 


Frt. 


Ck. 


Ctg. 


Oct.  22. 
Oct.  22. 


Balance, 
Cash  Sales, 


10.00 
88.85 


Oct.  22.  F.  W.  Harvey, 
Oct.  22.  Morgan  Bros., 
Oct.  22.  •  M.  B.  Parker, 


6.16 
7.44 


.75 
1.00 

.50 


October  24.  —  "Give  A.  M.  Lawson,  our  traveling  agent,  $ 
it  to  him.     It  is  for  a  mileage  book  and  expenses. 

"  The  Hotel  Richelieu  telephoned  for  2  dozen  partridges,  at 
at  $4.50.     Auditorium  Hotel,  7  barrels  apples,  at  $3.00." 


100  in  currency  and  charge 
$6.00,  and  3  barrels  apples, 


126 


BUSINESS   PRACTICE 


October  25.  —  "  What  is  the  balance  in  bank  ? 

"Write  out  a  check  for  $500  to  the  order  of  Farnum  &  Co.,  as  a  margin  to  cover  the 
purchase  of  10,000  bushels  of  wheat  for  us  on  the  Board  of  Trade." 

Note.  —  A  margin  is  a  cash  deposit  required  by  a  broker  to  insure  himself  against  loss  in  buying  and  selling 
for  a  customer.  If  the  price  of  the  commodity  changes  sufficiently  to  use  up  the  margin,  the  broker  calls  upon  his 
customer  for  additional  margin  ;  and  if  the  new  margin  is  not  deposited  promptly,  the  broker  may  close  out  his 
customers'  trades  in  order  to  protect  himself. 

"Mr.  E.  E.  Fish  wishes  a  check  for  $50  made  to  the  order  of  George  B.  Fish.  Write 
out  the  check  now  and  I  will  sign  it. 

"  Have  you  rendered  account  sales  for  the  consignments  that  are  closed  out  ?  No  ? 
About  time  you  did  —  it  is  after  3  o'clock.  Send  for  the  Checking  Book  at  once.  Charge 
5^  commission  on  poultry  and  game." 

Checking  Book 


October  22, 

19-.  . 

Lot  No.  4. 

F.    W. 

HARVEY 

Frt.  $5.16.  .Ctg. 

75^ 

Sheboygan, 

Wis. 

14  barrels  Apples. 

2  kegs  Cral 

Apples. 

5  barrels 

Apples 

@  $  4.00 

20.00 

3  barrels 

Apples 

@     4.50 

13.50 

2  barrels 

Apples 

@     4.00 

8.00 

2  barrels 

Apples 

@     3.75 

7.50 

2  barrels 

Apples 

' 

@     3.50 

7.00 

1  keg 

Crab  Apples 

@     1.75 

1.75 

Ikeg 

Crab  Apples 

@     1.60 

1.60 

16 

59.35 

Lot  No.  5. 

MORGAN 

BROS. 

Frt.  $7.44.     Ctg. 

$  1.00. 

Sheboygan, 

Wis. 

20  barrels 

Apples. 

7  barrels 

Apples 

@  $  3.00 

21.00 

3  barrels 

Apples 

@     4.00 

12.00 

10  barrels 

Apples 

@     3.00 

30.00 

20 

63.00 

Lot  No.  6. 

M.    B. 

PARKER 

Frt.                  Gtg. 

50«zf 

Sheboygan, 

Wis. 

1  box 

26  Partridges. 

2  dozen 

Partridges 

@  $  6.00 

12.00 

2  only 

Partridges 

@       .50 

1.00 

26 

13.00 

October  31.  —  "What  is  the  balance  in  bank?"  ($971.50.)  "What  is  the  balance  in 
the  Sheboygan  Bank?"     ($770.40.) 

"  Mail  Mr.   Bennett  a  check  for  $  50 ;  it  is  for  a  mileage  book. 

"  This  is  a  memorandum  of  the  employees  and  their  salaries :  shipping  clerk,  $  50  a 
month;  two  salesmen,  each  $65;  errand  boy,  $15;  stenographer,  $85;  cashier,  $40  ;  teamster. 


COMMISSION 


127 


$40;  and  yourself,  $100.     You  may  pay  them  to-day.     How  much  currency  do  you  require  ? 
.f  230  ?     Draw  a  check  for  the  amount  to  the  order  of  currency. 

"  Make  the  entry  for  the  salaries  of  the  partners  and  traveling  agents.  Mr.  Bennett 
and  Mr.  Lawson  receive  each  a  salary  of  $100  a  month.  They  both  began  work  on  Octo- 
ber 15th." 

Note.  —  As  this  is  the  last  day  of  the  month,  make  the  entries  for  the  rent  and  the  invoices  received. 
Take  off  a  trial  balance. 

Invoices  received  during  the  Month 

Chicago,  October  17,  19.... 

Bought  of  Wells,  Smith  &  Co. 


A.  M.  Chase  &  Co. 

2000  Letter  heads, 
2000  Bill  heads, 
5000  Envelopes, 
1000  Business  cards, 


$4.00 
4.00 
4.00 
1.50    $  13.60 


Paid 


Wells,  Smith  &  Co. 


Chicago,  October  15,  19.... 
A.  M.  Chase  &  Co.,  Chicago. 

To  The  Chicago  Telephone  Co.  Dr. 
Rent  of  telephone  No. from  Oct.  15,  19....  to  Jan.  15,  19....         $37.50 


Chicago,  October  15,  19.... 


A.  M.  Chase  &  Co.,  Chicago. 

Bought  of  DiEBOLD  Safe  Co. 
1  Diebold  safe  No. , 


$  65.00 
Chicago,  October  31,  19 — 


A.  M.  Chase  &  Co.,  City. 

To  The  Chicago  Gas  Lt.  &  Coke  Co.  Dr. 

Gas  from  October  15  to  October  31, 
Less  20% 

Manager's  Instructions  to  his  Bookkeeper 


$  13.50 

2.70 

$10.80 


November  1. — "Orders  received  by  telephone:  Hotel  Richelieu,  100  lb.  Canvas-back 
duck,  @  11^;  5  bbls.  apples,  @  $4.50.  Auditorium  Hotel,  222  lb.  chicken,  @  8^^;  13 
bbls.  apples,  @  $4.50." 

November  2.  — "Write  out  a  check  for  $500,  and  mail  it  to  the  Sheboygan  Bank. 

Petty  Cash  Book 


Dr. 

Frt. 

Cr. 

Ctg. 

Nov.  1. 
Nov.  ]. 
Nov.  2. 

Balance, 
Cash  Sales, 
Cash  Sales, 

$  10.00 
69.92 
31.56 

Nov.  1. 
Nov.  1. 
Nov.  1. 

Frank  &  Son, 
M.  D.  Bright, 
Pulley  &  Co. 

f  9.34 
2.48 
4.97 

$1.25 

128 


BUSINESS  PRACTICE 


"M.  D.  Bright  writes  that  he  has  drawn  a  draft  on  us  for  $40  to  the  order  of  George 
Swift,  so  do  not  send  check  for  his  consignment,  as  we  will  pay  the  draft." 
November  5.  —  "Write  out  a  check  for  last  month's  gas  bill." 


Checking  Book 


Lot  No.  7. 

Frt.  $9.34.     Ctg.  $1.25. 

25  barrels 

November  i, 
FRANK  & 

Apples. 

19—. 

SON, 

Sheboygan, 

Wis. 

13  barrels 
7  barrels 
5  barrels 

25 

Apples 
Apples 
Apples 

@.  f  4.50 
@     3.00 
@     4.50 

58.50 

21.00 

22.50 

102.00 

Lot  No.  8. 
Frt.  1 2.48.     Ctg. 
2  barrels 

M.   D.   BRIGHT, 

Poultry  415  lb. 

Fort  Howard, 

Wis. 

371  lb. 
44  1b. 
415 

Poultry- 
Poultry 

@12^ 
@10^ 

44.52 

4.40 

48.92 

Lot  No.  9. 
Frt.  $4.97.     Ctg. 
363  lb.  Duck 

PULLEY 

222  lb.  Chicken. 

&  CO. 

Fort  Howard, 

Wis. 

263  lb. 
100  lb. 
222  lb. 
585 

Duck 
Duck 
Chicken 

@12^ 

31.56 
11.00 

18.87 
61.43 

November  7.  — "  Mail  a  check  to  the  Chicago  Telephone  Co.  for  the  balance  of  their 
account. 

"  Deposit  to-day  $  75  in  currency. 

"  Mail  to  Mr.  Bennett  a  check  for  $  150,  and  charge  it  to  his  expense  account. 

"  Mrs.  A.  M.  Lawson  is  here,  and  she  wishes  a  check  for  $  100  ;  give  it  to  her  and 
charge  it  to  Mr.  Lawson 's  account. 

"  What  is  the  balance  in  bank  ?  Bank  account  overdrawn  $  31.80  ?  Well,  we  shall  have 
to  make  good  that  amount  by  November  10,  as  all  the  checks  will  have  been  presented  for 
payment  at  the  bank  by  that  date." 

November  10.  — "  The  messenger  from  the  Third  National  Bank  was  here  with 
M.  D.  Bright's  draft,  drawn  on  us  for  $  40  at  five  days'  sight.  I  have  accepted  the 
draft. 

"I  called  this  morning  on  M.  A.  Cook  &  Co.  in  reference  to  exchanging  checks  with 
us  for  a  few  days.  They  expressed  regret,  but  they  could  not  accommodate  us,  as  they  were 
short  of  funds  themselves.  However,  they  said  if  their  note  would  be  an  accommodation 
to  us,  they  would  be  pleased  to  favor  us  with  it,  so  that  we  could  have  it  discounted,  and 
thereby  obta,in  what  money  we   require.     This  is  their  note,  $  200  at   20  days,  payable  at 


COMMISSION 


129 


the  Third   National  Bank.     Enter  it,  and  1  will  take  it  to  the  bank  and  see  if  1  can  get 
it  discounted. 

Note.  —  A  note  by  means  of  which  one  lends  his  credit  in  this  way  is  called  accommodation  paper.  Had 
M.  A.  Cook  &  Co.  agreed  instead  to  the  exchange  of  checks,  A.  M.  Chase  &  Co.  would  have  deposited  the  former's 
check  at  once  in  order  to  make  use  of  the  money,  while  Cook  &  Co.  would  have  delayed  depositing  Chase  &  Co.'s 
check  for  a  day  or  so  in  order  to  give  the  latter  time  to  raise  the  money  to  meet  it. 

"The  bank  discounted  M.  A.  Cook  &  Co.'s  note,  charging  7  %  discount.     (20  days,  78^.) 
When  you  go  to  the  bank,  see  that  the  proceeds  are  entered  in  the  Deposit  Book." 
November  15. — "These  are  W.  H.   Bennett's  Expense  books:"  — 


October  Expense  Book,  —  Sundry  items. 

Mileage  book  #22768,  2000  miles,   @  2^ 
Total  expenses, 

November  Expense  Book,  —  Sundry  items. 

Mileage  book  #24356,  1500  miles,   @  2^ 
Total  expenses, 


$  63.50 

40.00 

f  103.50 

f  78.45 

30.00 

$  108.45 


"  How  about  Mr.  Bright's  draft ;  is  it  due  to-day  ?  Yes  ?  Then  write  out  a  check  for 
the  amount,  and  when  the  bank  messenger  comes  in  you  may  pay  the  draft.  The  Third 
National  Bank  has  it. 

"  By  the  way,  I  failed  to  tell  you,  Mrs.  W.  H.  Bennett  called  on  November  10,  and  I 
gave  her  a  check  for  $  50  from  my  private  Check  Book,  but  signed  the  firm's  name  to  it. 
Now  while  you  think  of  it,  you  had  better  fill  in  a  stub  for  the  amount  and  have  it  posted 
to  Mr.  Bennett's  account. ^  Also  give  Mr.  Bennett  credit  for  the  remaining  number  of  miles 
in  this  mileage  book:  mileage  book  number  24356,  500  miles  at  2^,  ilO,  rebate  cover,  $10, 
total,  $  20. 

"Mr.  Bennett  informed  me  this  morning  that  he  is  going  to  leave  us  to-day.  Write 
up  his  accounts  to  date  and  transfer  the  balance  of  his  Expense  account  to  his  private  account, 
a,nd  then  let  me  know  what  the  balance  is." 

November  23. — "Orders  received  by  telephone:  Lake  Shore  Hotel,  52  lb.  culls,  @  7^. 
Hotel  Richelieu,  111  lb.  chicken,  @  8^;  563  lb.  turkey,  @  12^." 

Petty  Cash  Book 


Dr. 

Cr. 
Frt.                 Ctg. 

Nov.  22.     Balance,           $  10.00 
Nov.  22.     Cash  sales,          55.50 

Nov.  22.     John  W.  Smith,                     f  10.18             .75 
Nov.  22.     G.  M.  Goodrich,                         2.94            .50 
Nov.  22.     M.  D.  Bright,                              7.34             .50 

November  28.  —  "  What  is  the  balance  in  bank  ?  " 


Petty  Cash  Book 


Dr. 

Cr. 
Frt.                  Ctg. 

Nov.  28.     Balance,           $  10.00 
Nov.  28.     Cash  sales,        255.72 

^  The  bookkeeper  is  supposed  to  destroy  the  check  when  writing  the  stub,  but  the  student  should  fill  it  in  and 
place  it  with  the  others  in  his  envelope,  to  represent  the  check  given  by  the  manager.  ' 


130 


BUSINESS  PRACTICE 


Checking  Book 


November  22, 

19.... 

JOHN 

W.  SMITH 

Lot  No.  10. 

Frt.,  $10.18.     Ctg.,  75^. 

Sheboygan,  Wis. 

7  barrels 

Poultry 

1767  lb. 

52  1b. 

Culls 

@     7^ 

3.64 

1477  lb. 

Turkey 

@  12^ 

177.24 

238  lb. 

Canvas-back  Duck 

@11^ 

26.18 

1767 

207.06 

GEORGE 

M.  GOODRICH 

Lot  Ko.  11. 

Frt.,  12.94.     Ctg.,  50^. 

EoRT  Howard,  Wis. 

1  box             2  barrels 

Poultry 

566  lb. 

112  lb. 

Turkey 

@  12i^ 

14.00 

195  lb. 

Chicken 

@    8^ 

15.60 

259  lb. 

Canvas-back  Duck 

@  10^ 

25.90 

566 

55.50 

M.    D. 

BRIGHT 

Lot  No.  12. 

Frt.,  $  7.34.     Ctg.,  50  ^. 

Fort 

Howard,  Wis. 

6  barrels 

Poultry 

1197  lb. 

1111b. 

Chicken 

@    8^ 

8.88 

563  lb. 

Turkey 

@  12^ 

67.66 

523  lb. 

Chicken 

@  10^ 

52.30 

1197 

128.74 

November  30.  —  "  Deposit  to-day  $350  in  currency. 

"  What  is  the  balance  in  the  Sheboygan  Bank  ?  "     ($  786.28.) 

"  As  this  month  closes  our  business  with  consignors  in  Wisconsin,  you  may  draw  a  draft 
at  sight  on  the  Sheboygan  Bank  for  our  balance.  Draw  through  our  bank  here,  and  have  the 
draft  deposited  to  our  credit  when  you  go  to  the  bank. 

"  When  must  M.  A.  Cook  &  Co.  take  up  their  note  ?  To-day  ?  You  should  have  spoken 
of  it  before  now.  Write  out  a  check  immediately  for  the  amount  and  have  the  errand  boy 
take  it  to  their  office. 

"  Farnum  &  Co.  have  sold  out  our  purchase  of  10,000  bushels  of  w^heat.  This  is  their 
check  for  the  net  proceeds,  $199.28. 

"  Has  Mr.  Lawson  sent  in  his  expense  book  for  October  ?  No  ?  Then  write  to  him,  and 
say  that  we  must  have  his  expense  book  promptly  the  first  of  every  month. 

"  Write  out  a  check  for  the  employees'  salaries  and  I  will  sign  it,  for  I  must  leave  the 
office  in  a  few  minutes  and  shall  not  be  here  again  to-day.  What  will  be  the  amount  of  the 
check?"     ($460.) 

"  Do  not  fail  to  leave  the  Deposit  Book  at  the  bank  to  be  balanced^  as  that  matter  was 
overlooked  last  month. 

"Close  the  books  this  month  and  let  me  have  the  statements  by  December  5."  (See 
inventories,  page  131.) 


COMMISSION 


131 


Invoices  received  during  the  Month 

Chicago,  November  24,  19... 
A.  M.  Chase  &  Co.,  City. 

To  The  Chicago  Gas  Lt.  &  Coke  Co.  Dr. 


Gas  from  October  31  to  November  24, 

Less  20% 


$15.00 

3.00      $  12.00 


Chicago,  November  1,  19.... 
A.  M.  Chase  &  Co.,  City. 

To  H.  0.  Sweet  &  Co.  Dr. 
Rent  for  No. South  Water  St.  for  month  of  November  $250.00 


Inventories 


Furniture  and  Fixtures 
Horses  and  Wagons  . 
Mileage 


$  550.00 

1000.00 

20.00 


Note.  —  Although  the  consignments  in  this  set  are  all  sold  out  at  the  time  of  closing  the  books,  it  often 
occurs  in  the  commission  business  that  there  are  consignments  on  hand  which  are  only  partly  closed  out  at  this 
period.  In  such  a  case  the  extensions  should  be  made  for  what  has  been  sold,  according  to  the  Checking  Book, 
and  the  total  amount  inserted  in  Merchandise  account  as  a  liability  inventory,  because  it  represents  the  debts 
which  the  firm  owes  the  shippers.  In  Freight  and  Cartage  account  insert  the  total  charges  paid  out  on  these  con- 
signments and  in  Commission  account  the  total  commission  on  what  has  been  sold.  These  two  amounts  should 
be  inserted  as  resource  inventories  because  they  represent  debts  which  the  shippers  owe  the  firm. 


Monthly  Bank  Statement 


19  Vouchers  Returned. 

A.  M.  CHASE  &  CO. 

In  Account  Current  with  the  STUDENTS'  NATIONAL   BANK  of  Chicago. 

Checks 

Checks 

Checks 

Checks 

Checks 

19.... 

Deposits 

50 

00 

230 

00  ■ 

Oct. 

15 

3000 

00 

150 

00 

50 

00 

Nov. 

7 

75 

00 

13 

50 

500 

00 

u 

10 

199 

22 

125 

00 

10 

80 

u 

30 

350 

00 

65 

75 
1000 

00 
00 
00 

37 

100 

40 

50 
00 
00 

u 

30 

786 

28 

4410 

50 

50 

00 

50 

00 

500 

00 

460 
150 

00 
00 

3656 

80 

Bal 

ance, 

753 

70 

(red  Ink) 

4410 

50 

November  30,  check  #19,  — 1 200,  still  out. 

Note.  —  A  statement,  such  as  given  above,  is  rendered  by  most  banking  houses  to  depositors,  instead  of 
showing  the  process  of  balancing  in  the  Deposit  Book  each  month.  The  student,  however,  may  copy  it  in  his 
Deposit  Book  as  before. 


132  BUSINESS  PRACTICE 

QUESTIONS    FOR   DISCUSSION 

1.  In  how  many  different  ways  may  a  personal  account  close  ?  Name  them.  2.  If  placed  in  charge  of  a  set 
of  books  of  slightly  unusual  form,  how  would  you  familiarize  yourself  with  them  ?  3.  Your  employer  wishes  to 
know  the  full  amount  of  his  dealings  with  a  customer  who  always  pays  cash.  Is  it  possible  to  prepare  a  state- 
ment? What  books  or  papers  might  be  consulted?  4.  Write  out  a  note  in  payment  for  merchandise.  Trace  by 
entries  in  your  books,  in  books  of  merchant,  etc.  5.  Explain  in  detail  how  you  would  prove  that  the  following 
classes  of  personal  accounts  in  the  Ledger  are  correct :  purchase  accounts,  salary  accounts,  commission  accounts, 
customers'  accounts.  6.  If  no  trial  balance  has  been  drawn  off  from  a  set  of  books  for  three  months  or  more, 
explain  how  to  proceed  with  the  work,  and  state  how  many  trial  balances  you  would  take  off.  7.  Explain  how 
you  would  audit  a  Cash  Book,  Journal,  Sales  Book,  etc.  8.  What  statement  does  a  bank  require  of  some 
depositors  before  it  decides  to  make  them  loans?  9.  Why  should  the  dates  of  entries  in  the  Books  of  Original 
Entry  and  the  Ledger  be  in  regular  order  ?  In  "what  part  of  the  entries  should  the  exact  dates  of  transactions 
occurring  previous  to  the  entry  be  noted  ?  10.  If  a  personal  account  or  a  bill  receivable  has  been  charged  off  to  Loss 
and  Gain  account,  what  account  should  receive  the  credit  if  the  amount  is  paid  later?  11.  Give  several  reasons 
why  a  business  may  show  a  large  profit  or  surplus  and  yet  have  a  small  cash  balance  on  hand. 

SECTION  III.    CONTRACTING  BUSINESS 

198.  A  Contract  is  a  written  agreement  between  two  or  more  persons  stating  in  detail  the 
obligation  of  each  party.  It  is  usually  an  agreement  by  one  party  to  furnish  certain  goods, 
or  to  perform  certain  work,  for  a  certain  price ;  and  by  another  party  to  pay  this  price  at  a 
certain  time,  in  a  specified  manner. 

199.  A  contractor  has  two  accounts  for  each  contract,  —  Construction  and  Personal. 

200.  The  Construction  Account  shows  the  cost  of  fulfilling  the  contract  and  also  the  profit 
or  loss  on  it. 

When  the  contract  is  received,  this  account  is  credited  with  the  amount  stipulated  in  the 
contract,  and  it  is  debited  with  labor,  materials  used,  etc.,  at  cost  price.  The  excess  of  the 
credit  side  is  a  liability  until  the  work  is  completed  ;  when  the  work  is  completed,  the  difference 
between  the  two  sides  shows  the  amount  of  profit  or  loss,  which  is  transferred  to  Loss  and  Gain 
account  by  Journal  entry. 

Note.  —  The  name  of  this  account  varies  with  the  nature  of  the  business  carried  on.  For  example:  Con- 
tractors who  build  or  construct,  would  use  the  word  "  Construction,"  while  electric  light  contractors  would 
employ  the  word  "  Installation,"  decorators  the  word  "  Decoration,"  etc. ;  for  instance,  Smith  House  Construc- 
tion, Smith  House  Installation,  etc. 

201.  The  Personal  Account  is  an  account  with  the  person  who  pays  for  the  contract.  This 
account  is  debited  with  the  amount  of  the  bill  rendered,  and  credited  with  the  remittances. 

202.  Contract  Account  shows  the  amount  of  contracts  received  and  completed.  It  is 
debited  with  the  amounts  of  contracts  received,  and  credited  as  the  contracts  are  finished. 
The  balance  of  this  account  is  an  asset  (corresponding  to  the  liabilities  shown  in  the  construc- 
tion accounts).     The  account  balances  when  all  contracts  are  completed. 

203.  The  following  set  of  books  can  be  applied  to  any  line  of  business  in  which  the  firm 
undertakes  to  perform  work,  furnish  supplies,  etc.,  for  a  consideration  according  to  contract :  — 

Auxiliary  Books :    Order  Book  (blanks).  Receiving  Book,  Shipping  Book,  Petty  Cash 
Book,  Invoice  Book,  Deposit  Book,  Check  Book,  Bill  Book,  Construction  (Cost)  Book. 
Books  of  Entry :  Contract  Book,  Contract  Sales  Book,  Cash  Book,  Journal,  Ledger. 

204.  The  Construction  (Cost)  Book  shows  the  itemized  cost  of  materials,  labor,  etc.,  used 
in  fulfilling  each  contract.     The  items  are  obtained  from  requisitions,  vouchers,  invoices,  etc. 

The  columns  have  different  headings  according  to  the  nature  of  the  business. 


CONTRA  C  riNG  B  U  SI  NESS 


133 


All  credits  (such  as  for  unused  material  returned  or  resold)  should  be  written  in  red  ink 
and  their  totals  entered  in  the  credit  column  until  the  contract  is  completed,  when  the  amounts 
should  be  deducted  from  their  respective  columns. 


Construction  Book 


o 

be 


o 


o 


^ 


i-H 

d 

o 
cd 
u 
-p 

d 
o 
O 


«5  .2 

§1 

^  2, 

^  1 

Incidentals 
Hotel  Bills 
E.  E.  Fare 

lO                        o 

OS                     .-1 
I— 1 

iM 

IM 

Freight 
Express 
Cartage 

O 
t^ 

iM 

(M 

(M 

Engines 

and 
Boilers 

, 

Piping 

and 

Foundation 

C 

1 

Dynamos 

and 
Wiring 

§  8            § 

8§ 

s 

?0      I-H                                   l-H 

IM 

c. 

Lamps 

and 
Sockets 

8 

8 

o  1 

o 

o 
I— 1 

o 
1—1 

'3 

o 
H 

o 

8               8 

g 

g 

1-H 

1—1 

1 
1— i 

o  >-o  >o 

O  t^  t^ 

88 

o  o 

O  O 

i 

lO  iM  C5 

o  o 

00  .-H 

g 

M 

S 
P 

Chicago  Electric  Co.,  invoice,  May  10 
1  200-Lt.  Dynamo 
1  Rheostat 

1  Iron  Base 

New  York  Electric  Co.,  invoice,  May  10 

Wire,  Conduit,  Cut  Outs,  and  Switches 
C.  C.  Evans,  statement_,  May  15 

Labor 

Cartage 

Incidentals 
Sawyer-Man  Electric  Co.,  invoice.  May  25 

200  Sockets  and  Inc.  Lamps 

2  Arc  Lamps 

Electric  Supply  Co.,  invoice,  May  12 

1  Switch  Board  and  Instruments 
Steamer  "^  Boland,''^  May  31   .              (red 

Scrap  Wire  returned                          ink) 
C.  C.  Evans,  statement.  May  31 

Labor 

Incidentals 

1 

Recapitulation 
Contract                                           $1800.00 
Cost 
Labor                            155.00 
Lamps                           110.00 
Dynamo  and  Wiring   912.50 
Cartage                             2.75 
Incidentals                     21.25 

1 

1 

s 

i 

-1-3 

o 

Pi. 
"S 

S  2 

»0             »0      O             .-H         r-(      »H      i-H            1 

1-1        1-1   (M        eo      to    SO   CO 

8  ^      -   ' 

^ 

-      -      ' 

134 


BUSINESS  PRACTICE 


205.  The  Contract  Book  contains  a  record  of  all  contracts.  Under  the  name  of  the  con- 
tract is  given  the  location,  the  name  of  the  party  who  is  to  pay  for  the  contract,  a  synopsis  of 
the  principal  features  therein,  the  terms,  and  the  amount. 

From  this  book  the  amount  of  each  contract  is  posted  to  the  credit  of  its  Construction 
account,  and  the  sum  of  the  contracts  received  each  month  is  posted  to  the  debit  of  Contract 
account. 

Contract  Book 

April,  1901. 


Bate 

Billed 


1901 
June 


Ledger 
Page 


75 


22 


Contract  No.  176  Date,  April  20,  1901. 

Contract  Name  Steamer  "Roland"  (Installation). 

Town,  Chicago,  111. 
Contract  for  200  Lt.  Electric  Lighting  Plant. 
For  Wright  Transportation  Co. 
Terms,  f  900  payable  May  15,  balance  when  plant 

is  started. 
Description, 

1    200  Lt.  Dynamo, 

1    Rheostat, 

1    Iron  Base, 

1  Switch  Board  and  Instruments, 
200    Sockets  and  Inc.  Lamps, 

2  Arc  Lamps, 
Including  material  and  wiring. 

Contract  Amount 


Contract  No.  177. 
Contract  Name 

Contract  for 

For 

Terms, 

Description, 


Date 
Town 


19 


Contract  Amount 


Contract  % 


Debit 


Amount 


Total 


1800 


00 


206.  The  Contract  Sales  Book  contains  a  record  of  the  bill  for  each  contract.  When  a 
contract  is  about  completed,  an  entry  is  made  in  this  book,  giving  the  name  of  the  party  that 
is  to  pay  for  the  contract,  the  terms,  the  items  in  the  contract,  and  the  amount.      An  exact 


CONTRA  C  TING  B  U SI  NESS 


135 


copy  of  the  bill  which  appears  in  this  book  is  then  sent  to  the  proper  person.  The  book  is 
posted  the  same  as  the  Sales  Book,  except  that  its  total  is  posted  at  the  end  of  the  month  to 
the  credit  of  Contract  account,  instead  of  to  Sales  account. 


Contract  Sales  Book 
June,  1901. 


125  Wright  Transportation  Co., 

Chicago,  111. 
Contract  No.  176. 

For  a  200  Lt.  Electric  Lighting  plant  installed  on  the 
steamer  "  Roland." 

Consisting  of : 

1  200  Lt.  Dynamo, 

1  Rheostat, 

1  Iron  Base, 

1  Switch  Board  and  Instruments, 
200  Sockets  and  Inc.  Lamps, 

2  Arc  Lamps, 
Including  material  and  wiring  as  per  contract,  1800  00 

Terms,  $  900  payable  May  15,  balance  when  plant  is 
started. 


SET   III.     EXERCISES 

General  Instructions.  —  Books  required  :  Deposit  Book,  Check  Book,  Bill  Book,  Construc- 
tion Book,  Cash  Book,  Journal,  Contract  Book,  Contract  Sales  Book,  Ledger. 

The  student  may  rule  his  own  Construction  Book,  Contract  Book,  and  Contract  Sales 
Book  according  to  the  specimen  pages.  (See  pages  133,  134,  and  above.)  The  Construction 
Book  will  require  about  four  pages,  and  the  Contract  Book  and  Contract  Sales  Book  each  two 
pages. 

Representative  accounts  used :  Bills  Payable,  Bills  Receivable,  Cash,  Commission,  Con- 
tract, Entertainment,  Expense,  Furniture  and  Fixtures,  Interest  and  Discount,  Loss  and  Gain. 
Machinery,  Michigan  Flats  Construction,  Palace  Hotel  Construction,  Rent,  Salary,  Stationery. 
Tools. 

The  name  of  the  firm  is  C.  H.  Smith  &  Co.  The  partners  are  C.  H.  Smith  and  George  A. 
Day.  C.  H.  Smith  is  to  be  the  manager  and  receive  a  salary  of  $300  a  month.  George  A. 
Day  is  to  receive  a  salary  of  f  150  a  month  and  6  ^  interest  per  annum  on  his  net  investment. 

The  net  profit  or  loss  is  to  be  divided  as  follows:  C.  H.  Smith  is  to  receive  40^, 
and  George  A.  Day  60^. 

Manager's  Instructions  to  his  Bookkeeper 

Chicago,  March  1,  19 —  "As  shown  by  the  contract,  we  partners  invest  as   follows  : 

C.  H.  Smith  invests  cash,  $5000,  and  machinery  (per  inventory),  $5000.  George  A.  Day 
invests  cash,  $5000,  and  two  promissory  notes  indorsed  by  him  to  this  firm,  as  follows:  Note, 
$2500,  signed  by  D.  A.  Jones  &  Co.,  Boston,  dated  January  5  of  last  year,  at  14  months, 
payable  at  the  Boston  Bank.  Note,  $2500,  signed  by  G.  D.  Wait  &  Co.,  Chicago,  dated 
January  5  of  last  year,  at  18  months,  payable  at  the  Sixth  National  Bank. 


136 


BUSINESS  PRACTICE 


"Deposit  to-day  $10,000. 

"  Write  out  a  check  for  $  100  to  the  order  of  currency  for  the  cash  drawer. 
"  Give  to  C.  M.  Frost,  our  city  man,  a  check  for  $150  for  expenses. 
"  Send  a  check  for  $  75  to  Wyckoff,  Seaman  &  Co.  to  apply  on  account. 
"Enter  this  contract  received  from  the  Golden  Gate  Electric  Light  Co.,  San  Francisco, 
Cal.,  to  install  in  the  Palace  Hotel,  San  Francisco,  a  complete  steam  plant  consisting  of 


Two  200  Horse  Power  Engines, 
Four  100  Horse  Power  Boilers, 


One  Pump, 
One  Injector, 


One  Heater, 


and  pipiiig,  all  set  up  complete,  and  started,  for  the  sum  of  $  20,000. 

"Terms,  $5000  when  engines  are  delivered,  and  the  balance  subject  to  a  sight  draft  15  days 
after  plant  is  started." 

March  5. — "We  received  a  letter  from  D.  A.  Jones  &  Co.,  asking  us  to  favor  them 
by  renewing  $  1500  of  their  note  due  March  5.  They  inclosed  this  check  for  $  1000  and  note 
for  $  1500,  dated  March  5,  at  3  months,  with  interest  at  7  ^,  payable  at  the  Sixth  National  Bank. 
Our  firm  has  considered  the  matter  and  decided  to  favor  D.  A.  Jones  &  Co.  Make  the 
proper  entries  and  return  the  old  note  to  D.  A.  Jones  &  Co. 

"  Give  me  G.  D.  Wait  &  Co.'s  note,  and  I  will  have  it  discounted. 

"The  United  States  Engine  Co.  promised  to  ship  the  engines  for  the  hotel  in  San 
Francisco  in  two  weeks,  and  it  will  take  as  much  longer  for  them  to  reach  San  Francisco.  As 
soon  as  we  receive  notice  of  shipment  we  shall  send  our  erecting  man,^  John  Henry,  to  San  Fran- 
cisco, with  the  drawings,  so  that  he  can  have  the  foundation  ready  when  the  machinery  arrives. 

"C.  G.  Ware  &  Co.  have  discounted  G.  D.  Wait  &  Co.'s  note,  charging  us  7^  discount. 
This  check  for  $2441.67  is  the  proceeds  of  the  note. 

"Deposit  the  checks  which  are  in  the  safe."     ($3441.67.) 

March  15. —  "Have  this  list  of  tools  packed  and  ready  for  shipment,  and  give  the  teamster 
a  letter  to  the  Engineers'  Supply  Co.,  requesting  that  these  tools  be  shipped  in  the  same  car 
with  our  order  number  six  for  San  Francisco :  — 


1  Pipe  Cutter 

$  90.00 

1  Stone  Jack  . 

55.00 

6  Common  Jacks    . 

36.00 

12  Pairs  Pipe  Tongs 

.    ' 

28.00 

2  Pairs  Chain  Tongs 

24.00 

12  Wooden  Pulleys  . 

12.00 

500  lb.  1"  Manila  Rope 

75.00 

1  Crab     . 

60.00 

2  Chain  Blocks 

70.00 

2  Crowbars 

8.00 

2  Sledges 

11.00 

1  Saw      . 

1.00 

$470.00 

"  Do  not  fail  to  make  a  charge  for  these  tools." 

March  17.  —  "  To-day  I  shall  require  $  75.     If  you  have  this  amount  in  the  drawer,  I  will 
take  it. 

"  Give  this  man  $1.50  for  carting  the  tools  over  to  the  Engineers'  Supply  Co. 

"  Here  is  the  invoice  and  bill  of  lading  for  the  engines  from  the  United  States  Engine  Co. 
You  will  see  from  the  bill  of  lading  that  the  engines  are  on  cars  ^3142  of  the  A.  T.  &  S.  F.  R.R. 
and  :ji5^1430  of  the  N.  P.  R.R.     Make  a  memorandum  of  the  numbers  and  in  ten  days  have  the 
United  States  Engine  Co.  trace  them. 
;        "  Go  out  and  buy  a  first-class  ticket  via  the  Northern  Pacific  R.  R.  for  San  Francisco,  as 

1  An  erecting  man  is  one  whose  duty  it  is,  to  superintend  the  erection  of  engines,  boilers,  and  other  machinery. 


CONTRACTING  BUSINESS  137 

Mr.  Henry  prefers  that  route.  Also  secure  a  berth  for  him.  1  think  about  •$  85  will  cover  the 
cost.  Give  Mr.  Henry  the  ticket  and  $100  in  currency.  Draw  the  check  for  $185,  and  I 
will  sign  it  at  once. 

"  Go  to  our  bank  (Students'  National  Bank)  and  purchase  a  San  Francisco  bank  draft 
for  $1000  in  our  name,  and  charge  it -to  John  Henry.  Ask  the  cashier  of  the  bank  to  give 
Mr.  Henry  a  letter  of  introduction  to  their  San  Francisco  correspondent,  and  we  shall  have  him 
open  an  account  there  while  the  construction  is  going  on.  Be  sure  to  explain  to  Mr.  Henry 
before  he  goes  exactly  how  we  want  his  reports  made  out,  and  how  frequently  they  are  to  be 
submitted.  Make  your  explanation  clear  and  simple ;  remember  that  he  is  an  engineer,  not  a 
bookkeeper.  Impress  upon  him  that  we  I'equire  a  receipt  or  voucher  for  every  dollar  he  expends, 
and  that  we  shall  hold  him  responsible  if  he  fails  to  get  it." 

March  21. — "How  much  currency  did  you  give  me  Saturday?  You  say  $75?  Let  me 
see  the  receipt.  What  !  You  did  not  have  me  sign  a  receipt  ?  Hereafter  never  give  money 
to  any  one  out  of  the  cash  drawer  without  taking  a  receipt.  It  does  not  matter  whether  he  is  a 
partner  or  not,  always  ask  for  a  receipt,  so  that  there  will  be  no  reflection  upon  yourself  should 
there  be  any  dispute.  This  particular  transaction  places  you  in  a  very  embarrassing  position, 
because  on  returning  home  Saturday  I  counted  the  money  and  found  that  you  had  given  me 
only  $  60.  Does  the  cash  balance  ?  Yes  ?  Then  I  shall  have  to  be  the  loser,  as  I  failed  to 
count  the  money  when  you  gave  it  to  me. 

Mareh  31.  —  "  G.  A.  Day  wishes  a  check  for  $  200,  and  I  wish  one  for  $75. 

"  If  you  will  now  write  out  a  check  for  the  necessary  amount  ($183)  to  pay  the  office  help, 
I  will  sign  it,  as  I  shall  not  be  here  again  to-day.  (Stenographer,  $65  a  month;  errand  boy, 
$18;  bookkeeper,  $100.) 

"Enter  this  contract  from  A.  Breese  &  Co.,  Chicago,  to  install  in  the  Michigan  Flats,  one 
50  Horse  Power  Engine,  one  500  Light  Dynamo;  we  to  build  the  foundation  and  do  the 
piping  to  connect  the  engine  with  their  present  boilers  and  heaters,  and  also  to  connect  the 
wires  from  the  dynamo  to  the  switchboard :  all  for  the  sum  of  $  3500.  Terms,  $  1000  when 
engine  is  delivered,  $1000  when  dynamo  is  delivered,  and  the  balance  thirty  days  after  plant 
is  started. 

"  Before  bidding  on  this  contract,  we  had  an  estimate  from  the  Dynamic  Construction  Co. 
to  furnish  and  install  the  dynamo  and  the  necessary  wiring  for  $1100.  And  we  had  a  bid 
from  Abraham  Small  to  do  all  the  piping  for  $  325.  We  shall  place  both  of  these  orders  at 
once,  and  make  a  contract  with  Hiram  Abiff  to  build  the  foundation  for  $150.  As  to  the 
engine,  we  shall  use  one  of  those  50  H.  P.  we  have  in  stock. 

"  Here  is  Mr.  Henry's  statement.     Give  him  credit  for  it." 


San 

Francisco,  March 

24, 

19—. 

March  17. 

R.R.  Ticket 

$  85.00 

17. 

Cash                                        . 

100.00 

17. 

Bank  draft 

1000.00 

f  1185.00 

March  24. 

Credit 
Will.  Adams  &  Co.  on  acct. 

400.00 

24. 

Labor  to  date 

137.00 

24. 

Incidentals 

15.00 

24. 

Hotel  Bills 

20.00 

24. 

R.R.  Ticket 

85.00 

657.00 

Balance  on 
For  the  Palace  Hotel 

hand 

$528.00 

"  Here  is  a  telegram  from  Mr.  Henry,  saying  that  the  engines  have  arrived,  but  that  he 
has  not  enough  money  to  pay  the  freight,  $  800.     Write  out  a  check  to  the  order  of  the 


138  BUSINESS  PRACTICE 

Atchison,  Topeka  &  Santa  Fe  K.R.  Co.,  have  it  certified,  and  go  to  the  general  freight  office 
with  the  check  and  the  bill  of  lading  and  ask  them  to  accept  payment  here,  and  wire  their 
San  Francisco  agent  to  deliver  the  engines.  Charge  this  $800  to  the  United  States  Engine 
Co.,  as  their  price  was  f.o.b.  cars  San  Francisco. 

"  Mr.  Henry .  writes  that  he  has  vouchers  for  all  the  items  in  his  statement  and  that  he 
will  turn  them  in  with  his  Deposit  Book  and  canceled  checks  when  he  has  finished  the 
work.  He  has  sublet  the  contract  for  the  foundation  and  masonry  to  Wm.  Adams  &  Co. 
for  $  2200  and  has  paid  them  $  400  on  account.  We  will  send  a  bank  draft  for  the  balance 
when  he  notifies  us  that  the  work  is  completed. 

"  Have  the  Construction  Book  written  up  to  date." 

Note.  —  Make  entries  for  the  partners'  salaries  and  the  invoices  received  during  the  month. 
Take  off  a  trial  balance. 

Invoices  received  during  the  Month 

Chicago,  March  1,  19.... 
C.  H.  Smith  &  Co.,  City, 

Bought  of  Wyckoff,  Seaman  &  Co. 
1  #2  Remington  typewriter  # ,  $100.00 


Chicago,  March  1,  19 

C.  H.  Smith  &  Co.,  City, 

In  account  with  Chicago  Telephone  Co. 
Rent  of  telephone  ^ ,  from  March  1  to  Jmie  1,  19....,  f  37.50 

Chicago,  March  2,  19.... 
C.  H.  Smith  &  Co.,  City, 

Order  No.  2  Bought  of  C.  H.  Odell  &  Co. 

3  Curtain  Top  Desks,  @  f  25.00             .$75.00 

3  Armchairs,  @        5.00    .            15.00 

1  Bookkeeper's  Desk,  12.00 

1  Stool,  5.00 

1  Letter  File,  7.50 

5  Common  Chairs,  10.00 

1  Letter-press,  4.00         $128.50 


Chicago,  March  1,  19.... 
C.  H.  Smith  &  Co.,  City, 

To  C.  H.  Sweet  &  Co.  Dr. 
Rent  of  office  room  No. for  the  month  of  March,  $50.00 

Chicago,  March  31,  19.... 
C.  H.  Smith  &  Co.,  City, 

Bought  of  Chicago  Stationery  Co. 

1000  Letter  heads,  $8.50 

1000  Envelopes,  5.00 

1  box  Pens,  .85 

1  set  of  Books,  12.00 

500  Billheads,  _4.00  $30.35 

Erie,  Pa.,  March  15,  19.... 
C.  H.  Smith  &  Co.,  Chicago, 

Bought  of  The  United  States  Engine  Co. 

2  200  H.  P.  Engines,  #177,  #178,  @  $2600  $5200 

f.o.b.  cars  San  Francisco. 

Shipped  to  the  Palace  Hotel,  San  Francisco. 


CONTRACTING  BUSINESS 


139 


C.  H.  Smith  &  Co.,  City, 
Order  No.  1 
1  Pipe  Cutter, 

1  Stone  Jack, 

6  Common  Jacks, 
12  pairs  Pipe  Tongs, 

2  Pairs  Chain  Tongs 
12  Wooden  Pulleys, 

500  lb.  1"  Manila  Rope, 


Bought  of  Orr  &  Smith 


C.  H.  Smith  &  Co.,  City, 

1  Crab, 

2  Chain  Blocks, 
2  Crowbars, 

2  Sledges, 

1  Saw, 

5  Alcohol  Lamps, 

5  Pickaxes, 


Bought  of  Orr  &  Smith 


Chicago,  March  2,  19.. 


$  90.00 
55.00 
36.00 
28.00 
24.00 
12.00 
75.00        $  320.00 

Chicago,  March  2,  19.... 


60.00 

70.00 
8.00 

11.00 
1.00 
5.00 

12.50 


f  167.50 


Manager's  Instructions  to  his  Bookkeeper 

April  2.  —  "Here  is  the  invoice  (see  page  143)  of  the  Chicago  Steel  Boiler  Co.  and  the 
hill  of  lading  of  the  cars  on  which  the  boilers  were  shipped.  We  were  to  have  60  days  on 
this  account,  but  they  seem  to  need  money  and  offer  us  5  %  discount  if  we  will  pay  cash 
inside  of  ten  days.  What  is  the  balance  in  bank  ?  Very  well,  we  have  not  money  sufficient 
to  spare  in  order  to  take  advantage  of  their  offer.  Draw  a  sight  draft  on  the  Golden  Gate 
Electric  Light  Co.  for  $  5000  which  is  now  due,  as  the  engines  have  been  delivered.  Draw 
through  our  bank,  and  I  will  present  the  draft  to  the  bank  and  see  if  they  will  discount  it. 

"Do  not  fail  to  pay  the  Telephone  Company  to-day.     Send  them  a  check. 

"This  is  C.  M.  Frost's  statement  for  the  month  of  March." 


Chicago,  March  31,  19.... 

March  1.     Check  on  account, 

$150.00 

Cr. 

March  31.     Entertainment  expenses 

per  vouchers. 

63.00 

Balance  on  hand 

87.00 

f  150.00 

$  150.00 

"Mr.  Frost  began  work  March  1,  and  his  salary  is  f  125  a  month,  and  John  Henry 
began  work  March  15,  at  a  salary  of  $  75  a  month. 

"The  bank  would  not  discount  our  draft  drawn  on  the  Golden  Gate  Electric  Light  Co., 
and  I  left  it  for  collection,  with  instruction  to  wire  payment  or  non-payment.  If  it  is 
paid,  the  bank  will  allow  us  to  draw  against  it.  We  should  hear  from  it  in  five  days,  which 
will  enable  us  to  take  advantage  of  the  offer  of  the  Chicago  Steel  Boiler  Co. 

"  Here  is  the  invoice  of  the  Engineers'  Supply  Co.  (See  page  142.)  These  goods 
were  purchased  on  30  days'  time,  but  they  ask  us  to  give  them  a  note  for  the  amount,  and 
I  have  agreed  that  if  they  will  extend  the  time  to  90  days,  we  will  give  them  our  note 
without  interest.     I  expect  to  hear  from  them  in  a  few  days." 


140 


B  USINESS  PR  AC  TICE 


April  5.  -^ "  The  Engineers'  Supply  Co.  accepts  our  offer.  Make  out  a  90-day  note 
for  $1615,  dating  it  the  day  of  the  invoice,  March  21,  and  have  it  payable  at  our  office. 
I  want  to  send  it  to-day. 

"Let  me  have  D.  A.  Jones  &  Co.'s  note.  I  will  write  to  the  United  States  Engine  Co. 
to-day  and  inclose  the  note  to  apply  on  our  account.  Make  the  entry.  Note,  $  1500  ;  interest,. 
$26.25." 

April  11. — "The  bank  notifies  us  that  the  Golden  Gate  Electric  Light  Co.  has  paid  the 
draft.  You  may  now  write  out  a  check  to  the  Chicago  Steel  Boiler  Co.  for  $  2400,  less  5  f) 
discount.  (When  you  go  to  the  bank,  see  that  we  are  given  credit  on  our  Deposit  Book  for 
the  amount  of  the  draft,  $5000,  less  \fo  exchange  ($12.50)  for  collection. 

"What  do  we  owe  C.  H.  Odell  &  Co.?  Send  them  a  check  for  $28.50  and  a  30  day 
note  for  the  balance.  If  you  will  write  out  the  check  and  note  now  I  will  sign  them,  as 
I  shall  go  out  presently  and  not  return  to-day.  Write  to  C.  H.  Odell  &  Co.  and  inclose 
the  check  and  note. 

"Do  not  forget  to  send  a  check  for  the  gas  bill,  $3.50."  (Chicago  Gas  Light  & 
Coke   Co.) 

April  14l.  —  "Write  out  a  check  for  $85  in  favor  of  Mrs.  C.  H.  Smith  and  charge  it 
to  me.  She  will  be  in  about  11  o'clock,  but  as  I  shall  not  be  here  you  may  give  her  the 
check. 

"Make  the  entry  for  the  credits  on  Mr.  Henry's  statement." 


San 

Francisco,  April  9,  19 

March  24.     Balance  on  hand, 

$  528.00 

Cr. 

April  9.     Hotel  bill  to  date, 

$  20.00 

9.     Incidentals, 

8.50 

9.     Cartage  on  engines, 

125.00 

9.     Labor  to  date, 

235.00 

388.50 

Balance  on 

hand, 

f  139.50 

"We  have  delivered  to  the  Michigan  Flats  to-day,  from  stock,  one  50  H.  P.  engine,  #87,. 
inventoried  at  $  1050.     Charge  it,  at  that  price,  to  the  Michigan  Flats  Construction  account." 

April  18.  — "  Enter  this  check  for  $  1000  of  A.  Breese  &  Co.  It  is  to  apply  on  the 
contract. 

"Pay  this  man,  F.  H.  Pennoyer,  $4  for  cartage  on  engine  to  the  Michigan  Flats. 
Give  him  a  check. 

"Deposit  the  check  received  of  A.   Breese  &  Co." 

April  25.  — "  This  bill  for  $18.10  from  the  United  States  Engine  Co.  is  for  the  discount 
(61  days  at  7%)  on  D.  A.  Jones  &  Co.'s  note,  which  we  indorsed  to  them  a  while  ago.  Give 
them  credit  for  this  amount. 

"  We  have  sold  a  250  H.  P.  engine  to  Wm.  Heim,  St.  Louis,  Mo.,  for  account  of  the  United 
States  Engine  Co.,  for  $3100.  This  engine  is  to  be  shipped  and  billed  to  Wm.  Heim  by  the 
United  States  Engine  Co.,  and  our  commission,  $465,  is  to  be  charged  to  them.  We  have 
nothing  further  to  do  with  it.  Make  out  our  bill  for  the  commission,  charging  the  United 
States  Engine  Co.  with  the  same,  and  send  it  with  the  order." 

April  28.—  "  Send  Mrs.  C.  M.  Frost  a  check  for  $  75. 

"  Write  me  a  check  for  $  75. 

"  Mr.  Henry  has  just  returned  from  San  Francisco.  Here  is  his  final  statement*"  (See 
next  page.) 


CONTRACTING  BUSINESS 


141 


San 

Francisco,  April 

23, 

19 

April    9. 

Balance  on  hand, 

f  139.50 

15. 

Golden  Gate  E.  Lt.  Co.     on  acct., 

Cr. 

2000.00 
f  2139.50 

April  15. 

Freight  on  boilers, 

f  1100.00 

9. 

Freight  on  supplies,  etc., 

450.00 

11. 

Cartage  on  above. 

80.00 

23. 

Labor  to  date, 

230.00 

23. 

Hotel  bill  to  date, 

35.00 

23. 

R.R.  fai'e  on  return, 

65.00 

23. 

John  Henry  (personal), 

Balance  on  hand, 

65.00 

2025.00 
$  114.50 

"The  statement  from  the  San  Francisco  Bank  shows  that  there  is  $79.50  to  our  credit. 
Draw  a  sight  draft  on  them  for  the  amount  to  the  order  of  our  bank,  and  have  it  deposited  to 
our  credit  when  you  go  to  the  bank. 

"Enter  this  bill  which  Mr.  Henry  received  from  Wm.  Adams  &  Co." 


San  Fkancisco,  April  5,  19 


C.  H.  Smith  &  Co., 

Chicago. 


To  Wm.  Adams  &  Co.,  Dr. 

Building  engine  foundation  complete  in  the  Palace  Hotel,  according  to 

contract,  .  $  2200.00 

Cr. 
March  24.     Check  on  account,  400.00 

Balance  due,  $  1800.00 


"  Mr.  Henry  promised  Wm.  Adams  &  Co.  a  check  for  the  balance  as  soon  as  he  arrived 
here.  To  save  exchange  I  will  send  them  an  order  on  the  Golden  Gate  Electric  Light  Co.  for 
the  amount.      (Do  not  make  any  entry  until  the  Golden  Gate  Electric  Light  Co.  notifies  us.)'' 

April  30. — "Make  out  the  bill  for  the  Golden  Gate  Electric  Light  Co.'s  contract,  and 
about  May  5  you  may  draw  a  sight  draft  on  them  for  the  balance. 

"  Mail  a  check  for  $100  to  C.  H.  Sweet  &  Co.,  office  rent  for  March  and  April. 

"Send  the  bill  for  A.  Breese  &  Co.'s  contract. 

"  This  is  C.  M.  Frost's  statement  for  the  month  of  April." 


C] 

aiCAGo,  April 

30, 

19 

March  31. 
April      9. 

Balance  on  hand, 
Check, 

Cr. 

$87.00 
100.00 

$187.00 

April    20. 
30. 

Labor  for  erecting  and  starting  engine 

in  the  Michigan  Flats, 
Entertainment  expenses  as  shown  by 
vouchers. 

Balance  on  hand. 

$60.00 
88.50 

148.50 
$38.50 

142 


BUSINESS  PRACTICE 


"  You  say  that  Mr.  Frost's  statement  reads,  April  9,  check  $  100,  and  that  there  is  no  such 
stub  on  the  Check  Book  ?  I  recollect  the  circumstance.  Having  met  Mr.  Frost  up  town 
that  day,  he  told  me  he  had  not  money  sufficient  to  pay  for  labor  at  the  Michigan  Flats,  so  I 
stepped  into  an  office  and  made  him  out  a  check  for  $100,  but  failed  to  tell  you.  It  is  all 
right,  make  a  stub  of  it,  charging  him  with  same.^ 

"  This  is  a  memorandum  of  the  tools  that  Mr.  Henry  shipped  to  Chicago.  Let  the  errand 
boy  check  them  before  you  credit  the  Construction  account." 


Returned  from  the  Palace  Hotel :  — 


San  Francisco,  April  23,  19. 


1  Pipe  Cutter 

$90.00 

4  Common  Jacks  . 

24.00 

12  pairs  Pipe  Tongs 

28.00 

2  pairs  Chain  Tongs 

24.00 

10  Wooden  Pulleys 

10.00 

500  lb.  Manila  Rope 

75.00 

1  Crab    . 

60.00 

2  Chain  Blocks       . 

70.00 

1  Crowbar 

4.00 

2  Sledges 

11.00 

$396.00 

"  Write  out  a  check  for  il83  to  pay  the  office  help. 

"  Show  me  the  Construction  Book  and  the  memorandum  of  the  tools  returned.  I  see 
there  are  tools  missing.  When  Mr.  Henry  calls  again  inform  him  that  according  to  his  memo- 
randum and  the  Construction  Book  there  are  several  tools  missing,  and  that  you  wish  to  know 
what  has  become  of  them. 

"  I  have  seen  Mr.  Henry  myself,  and  he  said  that  the  day  he  left  San  Francisco  he  sold  the 
stone  jack  for  $75  to  the  Golden  Gate  Electric  Light  Co.,  but  the  other  tools  must  have  been 
stolen,  as  he  could  not  find  them.  Charge  the  Golden  Gate  Electric  Light  Co.  with  the  stone 
jack,  and  mail  them  a  bill  for  it. 

"  Have  the  Construction  Book  written  up  to  date  and  rule  it  off. 

"Leave  the  Deposit  Book  at  the  bank  to  be  balanced." 

Note.  —  Make  the  entries  for  the  invoices,  salaries,  etc.     Take  off  a  trial  balance. 

■        "Close  the  books  and  let  me  have  the  statements  in  a  few  days."       (See   inventories, 
page  143.) 


Invoices  received  during  the  Month 


Chicago,  April  14,  19. 


C.  H.  Smith  &  Co.,  City. 

Bought  of  Hiram  Abiff. 

Building  engine  foundation  in  the  Michigan  Flats  as  per  contract,  $  150.00 


Chicago,  March  21,  19.... 
C.  H.  Smith  &  Co.,  City. 

Bought  of  Engineers'  Supply  Co. 

1  400  H.  P.  Heater,  $800.00 

16x4x6  Duplex  Steam  Pump,  225.00 

1  #10  Injector,  45.00 

1  lot  of  Cut  Pipe  and  Fittings,  455.00 

1  lot  of  Pipe  Covering,  90.00         $1615.00 

Shipped  to  the  Palace  Hotel, 

San  Francisco. 

1  The  student  should  fill  in  the  check  when  writing  the  stub  and  place  it  with  the  others  in  his  envelope. 


CONTRACTING  BUSINESS 


143 


Chicago,  April  20,  19..., 
C.  H.  Smith  &  Co.,  City. 

Bought  of  Dynamic  Construction  Co. 

1  500  Lt.  Dynamo, 

1  Rheostat, 

1  Iron  Base  and  wiring  the  Michigan  Flats  as  per  contract,      $1100.00 


Chicago,  April  16,  19 

C.  H.  Smith  &  Co.,  City. 

Bought  of  Abraham  Small. 
Piping  the  Michigan  Flats  as  per  contract,  $325.00 


Chicago,  March  31,  19 

C.  H.  Smith  &  Co.,  City. 

Bought  of  Chicago  Steel  Boiler  Co. 
4  100  H.  P.  Boilers  @  $600.00         $2400.00 

Shipped  to  San  Francisco. 


Chicago,  April  2,  19.. 
C.  H.  Smith  &  Co., 

To  The  Chicago  Gas  Lt.  &  Coke  Co.,  Dr. 

For  gas  consumed  from  March  2  to  April  2,  19... 
Index  at  this  reading,     3530 
Index  at  last  reading,         00 


To  consumption  of  3530  cubic  feet  gas  @  $1.10  per  M., 
Less  10%  if  paid  on  or  before  April  12, 


$3.88 
.38 


Paid  April  12,  19....' 

Machinery 

Furniture  and  Fixtures 

Tools. 


$3.50 
Chicago  Gas  Lt.  &  Coke  Co. 

J.  B.  WIOLLS,  Collector. 


Inventories 


$  3700.00 
225.00 
350.00 


Monthly  Bank  Statement 


20   Vouchers  Returned. 

C.   H.    SMITH   &   CO. 

In  Account  Current  with  the   STUDENTS' 

NATIONAL   BANK  of  Chicago. 

Checks 

Checks 

Checks 

Checks 

Checks 

19 

Deposits 

100 

00 

4 

00 

100 

00 

March 

1 

10000 

00 

150 

75 

185 

1000 

4 

2280 

00 
00 
00 
00 
00 
00 

75 

75 

200 

75 

183 

800 

00 
00 
00 
00 
00 
00 

183 

00 

5643 
13865 

50 
17 

(red  ink) 

April 

5 
11 

18 
28 

3441 

4987 

1000 

79 

67 
50 
00 
50 

Bal 

ance 

19508 

67 

19508 

67 

3 

50 

37 

50 

85 

00 

28 

50 

144 


BUSINESS  PRACTICE 


Debit  Memorandum 


^tuHmts'  National  Banft 

Debit  Chicago,  March  17,  19 _ 

C.   H.   SMITH   &   CO. 


Exchange  on  San  Francisco  draft 


4  00 


Note.  —  Copies  of  the  above  ticket  may  be  made  and  distributed  to  the  students  with  the  returned  checks. 
April  30^  check  #  18,  — f  100,  still  out. 

QUESTIONS  FOR  DISCUSSION 

1.  At  time  of  closing  the  books,  in  the  contracting  business,  what  accounts  must  remain  open  until  a  late 
date  before  they  can  be  transferred  into  Loss  and  Gain  account?  2.  Mention  several  kinds  of  contracting  busi- 
nesses in  which  the  Sales  Book  is  necessary.  3.  A  coal  dealer  makes  contracts  with  several  customers  to  furnish 
a  certain  amount  of  coal  to  them  at  a  specified  rate.  Would  such  contracts  be  treated  the  same  as  those  in  the 
business  of  a  contractor  who  constructs  buildings,  railroads,  etc.  ?  If  not,  how  would  you  note  the  contracts  on 
the  Ledger  of  the  coal  dealer  ?  4.  A  gives  B  an  order  for  five  cars,  f  10,000,  to  be  delivered  when  called  for,  not 
later  than  six  months  from  date.  B  immediately  demands  of  A  an  advance  of  10 '/o  of  the  value  of  the  cars, 
which  A  pays.  How  should  the  transaction  be  recorded  on  the  books  of  A  and  B  respectively,  and  when  should 
the  invoice  be  rendered  ? 

SECTION  IV.    CORPORATIONS 

207.  A  Corporation  is  a  company  of  persons  recognized  by  law  as  an  individual. 

208.  Organization. — In  forming  a  corporation,  the  following  steps  are  taken:  — 

1.  An  application  for  a  license  to  incorporate,  signed  by  three  or  more  persons  called 
Commissioners,  is  forwarded  to  the  Secretary  of  State.  Legal  advice  is  necessary  in  regard 
to  this  matter. 

2.  Upon  receipt  of  the  license,  a  subscription  list  is  arranged  thus :  — 

We,  the  undersigned,  hereby  severally  subscribe  for  the  number  of  shares  set  opposite 

our  respective  names  to  the  Capital  Stock  of  the Company,  and  we  severally 

agree  to  pay  the  said  company  for  each  share  the  sum  of  dollars,  on  such 

terms  and  conditions  as  may  be  determined  by  the  Board  of  Directors  of  said  company. 


Names 

Shares 

Amount 

C.  G.  White, 
John  E.  Andrews, 
A.  B.  White, 
W.  H.  Pierce, 

300 

150 

49 

1 

f  30000 

15000 

4900 

100 

00 
00 
00 
00 

500 

f  50000 

00 

CORPORA  riONS  145 

3.  After  the  expiration  of  at  least  ten  days  from  date  of  license,  the  subscription  list 
is  forwarded  to  the  Secretary  of  State,  who  issues  the  charter  which  completes  the  organiza- 
tion of  the  company. 

NoTK.  —  The  laws  of  the  different  states  in  regard  to  corporations  vary  greatly;  and  the  organization  of  a 
corporation  requires  a  very  thorough  knowledge  of  the  statutes  of  the  state  in  which  the  organization  is  effected. 
It  is  essential  that  all  legal  requirements  should  be  fully  met  before  there  is  any  attempt  to  begin  business. 

209.  The  Charter  is  a  document  detailing  the  organization  and  purpose  of  the  corporation, 
as  follows  :  the  name  of  the  corporation,  the  amount  of  authorized  capital  stock,  par  value 
per  share,  names  of  the  original  stockholders,  the  line  of  business  to  be  pursued,  etc. 

In  most  states  the  charter  must  be  recorded  in  the  office  of  the  County  Recorder ;  failing 
to  do  so,  a  company  is  not  recognized  in  court  when  filing  a  suit. 

210.  A  Share  is  a  fractional  part  of  the  capital  stock  of  a  corporation. 

211.  A  Stockholder  is  a  person  who  owns  one  or  more  shares  in  a  corporation. 

212.  A  corporation  is  managed  by  a  Board  of  Directors,  which  acts  through  the  officers. 
The  officers  are  usually  the  President,  Vice  President,  Secretary,  and  Treasurer. 

213.  A  corporation  is  governed  by  its  charter  and  by-laws.  In  case  of  failure  to  adhere 
to  them  it  is  liable  to  litigation,  through  the  dissatisfaction  of  one  or  more  stockholders. 
Such  action  is  likely  to  result  in  the  appointment  of  a  receiver  or  in  the  surrender  of  the 
charter. 

Corporation  Accounts 

214.  The  accounts  required  in  a  corporation  set  of  books  are  the  same  as  those  in  a 
partnership  set,  with  the  addition  of  the  following,  and  possibly  a  few  others :  Capital  Stock, 
Subscription,  Treasury  Stock,  Trustee,  Surplus,  Dividend,  Stock  Dividend,  Sinking  Fund, 
Bond  Payable,  Interest  Payable. 

215.  The  Capital  Stock  Account  shows  the  amount  of  stock  authorized  by  the  Secretary  of 
State.  This  is  the  first  account  to  be  credited,  and  its  amount  should  be  neither  increased 
nor  decreased  unless  the  change  is  authorized  by  the  Secretary  of  State. 

216.  The  Subscription  Account  is  debited  with  the  authorized  amount  of  capital  stock, 
and'  is  credited  as  the  stock  is  charged,  or  paid  in,  according  to  the  subscription  list  filed 
with  the  Secretary  of  State. 

217.  The  Treasury  Stock  Account  is  debited  with  the  unsold  stock  of  a  corporation. 
When  the  unsold  stock  is  placed  in  trust  with  some  responsible  person,  called  a  Trustee, 
the  Treasury  Stock  account  is  credited  and  the  Trustee's  account  is  debited. 

218.  The  Trustee  Account.  The  trustee  who  holds  the  unsold  stock  in  trust  to  be  sold 
is  charged  with  it;  and  he  is  credited  with  it  when  it  is  sold. 

219.  The  Surplus  Account  receives  the  balance  of  Loss  and  Gain  account  at  each  period 
of  closing  the  books.  The  debit  side  receives  the  net  loss,  and  the  credit  side  the  net  gain. 
There  is  no  transfer  made  from  this  account  until  there  is  a  surplus  from  which  a  dividend  or 
a  stock  dividend  is  declared.  The  amount  decided  upon  to  be  divided  should  be  transferred 
(by  Journal  entry)  from  this  account  to  Dividend  account  or  Stock  Dividend  account,  as  the 
Directors  may  determine. 

220.  The  Dividend  Account  shows  the  amount,  transferred  from  Surplus  account,  which  is 
to  be  paid  to  the  different  stockholders  in  currency  or  by  check.  The  account  is  credited 
with  the  amount  taken  from  Surplus  account,  and  it  is  debited  from  the  Cash  Book  when 
the  money  is  disbursed.  The  account  balances  when  all  stockholders  have  received  their 
dividends.  This  routine  is  observed  every  time  a  dividend  is  declared.  Every  dividend 
declared  is  numbered. 


146 


BUSINESS  PRACTICE 


221.  The  Stock  Dividend  Account  shows  the  amount  transferred  from  Surplus  account 
to  be  paid  to  the  stockholders  by  issuing  stock  to  them.  Permission  to  increase  the  capital 
stock  must  be  secured  from  tlie  Secretary  of  State.  Capital  Stock  account  is  credited  and 
Treasury  Stock  account  is  debited  with  the  increase.  As  the  stock  of  the  dividend  is  issued 
to  the  stockholders,  Stock  Dividend  account  is  debited  and  Treasury  Stock  is  credited. 

222.  Sinking  Fund  Account  contains  a  record  of  a  reserve  fund  which  may  be  used  for 
various  purposes,  but  which  is  usually  employed  for  the  liquidation  or  reduction  of  a  corpora- 
tion's debt.  The  balance  usually  represents  cash  deposited  in  a  special  bank.  When 
deposits  are  made  Sinking  Fund  account  is  debited  and  Cash  credited. 

223.  The  Bond  Payable  Account  is  opened  when  a  corporation  places  a  mortgage  on  its 
real  estate  or  other  property  by  issuing  bonds.  When  a  bond  is  sold,  the  account  is  credited 
from  the  Cash  Book,  and  when  a  bond  is  paid,  the  account  is  debited. 

224.  The  Interest  Payable  Account  is  debited  with  all  interest  paid  on  bonds. 


Stockholders'  Books 

225.  The  corporation  books  which  pertain  to  the  stockholders  are :   Minute  Book,  Stock 
Certificate  Book,  Stock  Register,  Transfer  Record,  Dividend  Book,  Stockholders'  Ledger. 

226.  The  Minute  Book  contains  the  license,  charter,  by-laws,  and  the  record  of  the  minutes 
of  all  the  meetings  lield  by  the  corporation. 

227.  The  Stock  Certificate  Book  contains  the  blank  certiiicates.     F'rom  tlie  stubs  the  Stock 
Register  is  written  up. 

Stock  Certificate  Book 


Certificate 
JVo.   J. 
For  25  Shares 

Issued  to. 

Bated  fun&  /,    190 f. 
From  whom  transferred^ 

Bated ....19 


No.  Original 
Certificate 


No.  of  Shares 
Transferred 


Received  Certificate  J^o.  3 

for  25  Shares 

this  /at  day  of  June,  190/ . 


Incorporated  under  the  Laws  of  the  State  of  Illinois. 


JVa    8. 


Shares  2o. 


(s^ 

a>??) 

C.  G. 

WHITE  FURJ^ITURE  CO 

(iS^ 

«\go) 

Capital  Stock  $50,000.00. 

This  Certifies  that  ^.  ^.  li}-kit&  is  the  owner  of  25  shares  of 
One  Hundred  Bollars  each  of  the  Capital  Stock  of  C.  G.  White 
Furniture  Company,  fully  paid  and  non-assessable,  transfer- 
able only  on  the  boohs  of  the  Corporation  by  the  holder  hereof 
in  person  or  by  Attorney,  upon  surrender  of  this  Certificate 
properly  indorsed. 

In  witness  whereof,  the  said  Corporation  has 

caused  this  Certificate  to  be  signed  by  its  duly 

[  SEAL  I        authorized  officers  and  to  be  sealed  with  the  seal 

of  the  Corporation  at  Chicago,  Illinois,  this  jCvat 

day  of  fti,n&,  A.B.  190/. 

Secretary.  President.  ■ 

SHARES    $  100    EACH. 


1  This  part  of  the  stub  is  filled  in  when  the  issued  certificate  is  the  reissue  of  a  transfer. 


CORPORA  TIONS 

The  followincf  is  the  bhink  form  on  the  back  of  Certificate  of  Stock  :  — 


147 


For  Value  Received hereby  sell,  assign,  and  transfer  unto. 

Shares  of  the  Capital  Stock  represented  by  the  within  Certificate,  and  do  hereby 
irrevocably  constitute  and  appoint 

Attorney, 

to  transfer  the  said  Stock  on  the  books  of  the  within  named  Corporation,  with 
full  power  of  substitution  in  the  premises. 

Dated ,  19 

In  presence  of 


r  2  3.-  §  ? 


o   2   -►  -=   ns 


Hi    o: 

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(|15  C  ^»-  e^  CD 

*  ^  5*  '^^  O 

^  Sr  «  &  - 

p"  (S  CB  »  E:* 

S.  3  s  c  S" 

«  r+  r;  p  p 

►?  a  ^  <>  rf5- 


Notes.  —  1.  Never  issue  the  original  stock  certificates  until  after  the  charter  has  been  received  and  recorded, 
for  a  company  is  not  a  corporation  until  it  receives  its  charter. 

2.  Always,  before  canceling  a  certificate,  see  that  the  one  or  more  in  its  place  have  been  reissued.  When 
a  certificate  transfers  only  part  of  the  shares  mentioned  therein,  new  certificates  must  be  issued  for  both  persons 
concerned. 

3.  When  a  stock  certificate  is  issued  for  fully  paid-up  stock,  it  should  contain  on  its  face  the  words  "  fully 
paid  and  non-assessable."  If  these  words  are  omitted  on  a  certificate,  it  is  supposed  to  be  understood  that  the 
stock  is  not  fully  paid,  and  consequently  is  assessable. 

4.  In  issuing  certificates  do  not  destroy  any  on  account  of  an  error,  but  mark  the  erroneous  certificate  "  Void," 
and  let  it  remain  attached  to  the  stub,  or  file  it  with  the  canceled  certificates. 

228.  The  Stock  Register  contains  a  record  of  all  the  stock  certificates  issued  and  canceled. 
This  register  is  divided  into  three  sections,  as  follows :  — 

1.  Register  of  Original  Stock  Certificates  Issued.  —  In  this  section  are  recorded  only  the 
stock  certificates  which  are  issued  for  the  subscription  to  the  original  capital  stock  or  for  any 
increase  of  capital  stock  thereafter. 

The  record  on  these  pages  shows  who  are  the  original  stockholders,  and  whether  certificates 
have  been  issued  for  the  full  amount  of  the  capital  stock.  The  latter  is  ascertained  by  footing 
the  column  called  "  Shares  in  each  certificate  "  and  comparing  its  total  with  the  number  of 
shares  authorized  by  the  charter,  plus  the  number  of  shares  for  the  increase  of  capital  stock  (if 
any)  according  to  the  certificate  of  increase. 

Register  of  Original  Stock  Certificates  Issued 

By  the  C.   G.   white  FURNITURE  CO. 


Date 

Stockholder's  Name 

Address 

Stock 
Ledger 
Folio 

No.  of 
Certifi- 
cate 

Shares  in 

each 

.a 

Share  Nnmbers 
Inclnsive ' 

Month 

Day 

Tear 

Certificate 

From 

To 

June 

1 
1 
1 

1901 
1901 
1901 

C.  G.  White, 
C.  G.  White, 
C.  G.  White, 

Chicago, 

1 
1 
1 

1 
2 
3 

2 

2 
5 

2 

5 
0 
5 

Copyrighted,  1893,  by  A.  £.  Rlngo. 

1  This  column  is  used  only  in  states  where  the  old  common  law  method  of  shares  and  capital  stock  still  exists. 
The  old  common  law  required  that  the  shares  be  numbered  in  numerical  order,  to  wit :  1000  shares  numbered  from  1  to 
1000  inclusive,  each  share  taking  and  keeping  a  fixed  number ;  the  object  being  to  make  it  possible  to  trace  the 
certificates  (if  any)  whose  par  value  has  not  been  fully  paid  in. 


148 


BUSINESS  PRACTICE 


2.  Register  of  Stock  Certificates  Reissued.  —  In  this  part  of  the  register  are  recorded  the 
stock  certificates  reissued,  beginning  with  the  first  reissue  of  an  original  stock  certificate.  It 
includes  only  left-hand  pages  of  the  Stock  Register. 


Register  of  Stock  Certificates  Reissued 
(Left-hand  page) 


Date  of  Eeissne 

To  Whom  Certificate  is 
Beissued 

Stock 
Ledger 
Folio 

Number 
of  Certifi- 
cate 

Shares 

in  each 

Share  Numbers 
Inclusive  ^ 

Signature  of  Person  or 
"Memo."  of  Attorney  asking 

Hontli 

Day 

Tear 

uenmcaie 

From 

To 

that  Transfer  be  Made 

July 

(I 

6 
6 

1901 
1901 

George  P.  Black, 
C.  G.  White, 

5 
1 

11 
12 

1 
1 

0 
5 

1  C.  G.  White. 

Copyirlghted,  1893,  by  A.  Zi.  Mingo. 

3.  Register  of  Stock  Certificates  Surrendered  and  Canceled.  —  In  this  section  is  recorded 
the  cancellation  of  stock  for  reissue.  It  embraces  the  right-hand  (credit)  pages  facing  the 
Register  of  Stock  Certificates  Reissued. 

And  of  Stock  Certificates  Surrendered  and  Canceled 
(Right-hand  page) 
^P"  Never  cancel  a  certificate  until  one  or  more  in  its  place  have  been  reissued. 


No.  of 
Transfer 

Date  of  Certificate 

To  Whom  Certificate  now 
canceled  was  Issued 

Stock 
Ledger 
Folio 

No.  of 
Certificate 

Shares 

in  Each 

o 

Share  Nos.  Inclusive  • 

Month 

Day 

Tear 

Certificate 

From 

To 

2 

June 

1 

1901 

C.  G.  White 

1 

3 

2 

5 

Copyrighted,  1893,  by  A.  X.  Mingo. 


229.  The  Transfer  Record  is  in  the  form  of  authorizations  for  transferring  stock.  These 
are  filled  in  and  signed  whenever  certificates  of  stock  are  surrendered  for  cancellation  and  re- 
issue. 

Transfer  Record  of  the  C.  G.  White  Furniture  Co. 


Surrendered 

Transfer  No.  2  entered  on  Stock  Register  page  1. 
For  value  received  I   hereby   surrender  to  the 
C.  G.  White  Furniture  Co.  certificate  No.  3  for  25 
shares  of  the  capital  stock  of  the  aforesaid  corpora- 
tion, and  I  hereby  authorize  the  cancellation  of  said 
certificate  and  the  issue  of  new  certificates  therefor 
to  the  following  persons:    Geo.  P.  Black,  10  shares, 
C.  G.  White  (myself),  15  shares. 

Signed,  C.  G.  WHITE,     [seal] 
Date,  July  6,  1901. . 

Reissued 

No.  of 
Certificate 

No.  of  Shares 

•      No.  of 
Certificate 

No.  of  Shares 

3 

25 

11 

12 

10 
15 

Copyrighted,  1893,  by  A.  i.  Mingo. 

1  See  footnote  on  preceding  page. 


.CORPORA  TIONS  149 

230.    The  Dividend  Book  contains  a  record  of  all  the  dividends  declared  by  the  corporation. 

Dividend  Book  (Left-hand  Page) 
Dividend    No....of.__per    cent    or    $ per   share,   declared 19...,   at    Meeting 


No. 
Oertificate 


Name 


Address 


Number  of 
Shares 


Amonnt  of 
Stock 


Amount  Divi- 
dend per  Share 


Dividend  Book  (Right-hand  Page) 
of  the \ Total  Dividend, 


.Dollars. 


No.  of 

Dividend 

Check 


Amount 

Dividend 

Paid 


Date  of 
Payment 


Eeceived  the  Amount  of  Dividend 

set  opposite  my  Name  on  the  Date 

thereon  Written 


Stockholder's  Address 


How  Eeceipted  for  when 
not  in  Person 


Copyrighted,  1893,  by  A.  L.  Ringo. 


231.  The  stockholders'  Ledger  is  frequently  divided  into  two  divisions,  viz.  Original 
Stockholders'  Ledger  and  Reissue  Stockholders'  Ledger. 

1.  The  Original  Stockholders'  Ledger  contains  only  the  accounts  of  the  stockholders  who 
subscribed  for  the  capital  stock  or  for  any  increase  of  capital  stock.  The  entries  for  this 
ledger  are  obtained  from  the  Register  of  Original  Stock  Certificates  Issued,  the  General 
Ledger,  the  Transfer  Record,  and  sometimes  the  Reissue  Register  (see  illustration,  page  148). 

Original  Stockholders'  Ledger 
C.   G.   WHITE 


When  Issued 

No.  Certificate 

Page 
Eeg. 

No.  of 
Shares 

of 
Stock 

Debits 

Credits 

Credits ' 

Date  of  Transfer 
1901 

No.  in 
Transfer 
Becord 

Surrendered 
Certificate 

When  Paid 
1901 

Original 

Beissne 

Par  Value 
of  Stock 

Amt.  paid  in 

Cash.)  Mdse.) 

or  Notes 

Amount  in 
Dividends 

Month 

Day 

No. 

No.  of 
Shares 

June 

a 

July 

1 
1 
1 
6 

1 
2 
3 

12 

1 
1 
1 

2 

225 
50 
25 
15 

22500 
5000 
2500 

00 
00 
00 

22500 

5000 
2500 

00 
00 
00 

July 

6 

2 

3 

25 

Copyrighted,  1893,  by  A.  T,.  Ringo. 

1  This  column  is  used  when  a  stockholder  allows  his  dividends  to  apply  in  part  payment  of  his  stock. 


150 


BUSINESS  PRACTICE 


2.  The  Reissue  Stockholders'  Ledger  contains  the  accounts  of  the  shareholders  who  have 
become  stockholders  by  transfer.  The  entries  for  this  ledger  are  obtained  from  the  Register 
of  Stock  Certiticates  Reissued  and  of  Stock  Certificates  Surrendered  and  Canceled,  and  the 
Transfer  Record. 

Reissue  Stockholders'  Ledger 

GEORGE    P.    BLACK 


When  Issued 

No,  of 
Certificates 

Prom  Whom  Eeceived 
Initials  Only 

Page 
S.  B. 

No.  of 
Shares 

■ 

Balance 
Shares 

When 
Canceled 

No.  of 
Certificates 

Transferred  to 
Initials  Only 

Page 
T.E, 

No.  of 
Shares 

1901 

Old 

New 

Old 

New 

July 

6 

3 

11 

C.  G.  White 

2 

10 

Copyrighted,  1893,  hy  A.  Jj.  Jtingo. 

Note.  —  The  forms  given  above  have  been  approved  by  the  Listing  Committees  of  the  Associated  Stock 
Exchanges  of  the  United  States,  and  are  good  in  any  state  or  territory  (except  in  those  states  whose  statute  laws 
prescribe  a  form  for  special  purposes). 

232.  In  canceling  a  certificate  on  the  books  of  a  corporation  the  following  method  should 
be  observed  :  — 

1.  When  a  stockholder  presents  his  own  certificate  to  be  changed  into  more  certificates 
for  himself,  the  bookkeeper  or  secretary  should 

(1)  Issue  the  new  certificates  and  mark  on  the  stubs  the  words  "In  lieu  of  No " 

(2)  Record  the  certificates  in  the  Reissue  Register. 

(3)  Cancel  the  old  certificate,  marking  it  "Canceled  in  lieu  of  Nos ,"  and  paste 

it  on  the  edge  of  its  original  stub,  or  file  it  with  the  canceled  certificates.  In  the  latter  case, 
rule  two  red  lines  diagonally  through  the  stub  so  as  to  indicate  that  the  corresponding 
certificate  is  no  longer  outstanding. 

(4)  Record  the  cancellation  in  the  Stock  Register  immediately  opposite  the  reissue 
record  just  made. 

2.  When  a  stockholder  presents  his  certificate  for  transfer,  the  bookkeeper  or  secretary 
should  see  that  the  stockholder  has  signed  his  name  on  the  back  of  the  certificate ;  then  he 
may  fill  in  the  power  of  attorney  and  proceed  to  make  the  transfer  on  the  books  as  follows :  — 

(1)  Issue  new  certificates,  to  equal  the  shares  in  the  canceled  one,  in  the  name  of  one 
or  more  persons. 

(2)  Record  the  certificates  in  the  Reissue  Register. 

(3)  Have  the  original  stockholder  sign  his  name  in  the  signature  column  of  the  Reissue 
Register. 

(4)  Have  the  original  stockholder  sign  the  Transfer  Record. 

(5)  Cancel  the  certificate  by  marking  in  red  ink  across  its  face  the  word  "  Canceled,"  the 
date,  and  the  number  of  the  transfer.  Then  paste  the  returned  certificate  to  the  edge  of  its 
original  stub,  or  file  it  and  rule  off  the  stub. 

(6)  Record  the  cancellation  in  the  Register  immediately  opposite  the  reissue  record  just 
made. 

3.  When  a  certificate  is  presented  to  the  corporation  for  transfer  by  the  person  to  whom 
it  is  transferred,  the  assignment  and  power  of  attorney  on  the  back  of  the  certificate  must 


CORPORATIONS  151 

have  been  properly  made  out  to  him ;  that  is,  the  instrument  must  have  been  signed  and  dated 
in  the  presence  of  another  person.  The  name  of  this  witness  should,  therefore,  be  signed 
under  the  words  "  In  the  presence  of." 

If  the  certificate  is  thus  properly  indorsed,  the  bookkeeper  or  secretary  should  make  the 
transfer  on  the  books  as  explained  in  case  2  above,  except  that  the  signature  column  in  the 
Reissue  Register  and  the  Transfer  Record  must  each  be  signed  in  the  name  of  the  original 
owner  per  the  transferee  as  attorney. 

233.  The  Private  (General)  Ledger. — Large  corporations  prefer  to  have  all  the  entries 
relating  to  the  opening  and  closing  of  books,  and  also  all  representative  accounts,  kept  in  a 
private  set  of  books.  This  set  may  be  composed  of  a  Journal,  Cash  Book,  and  Ledger.  Each 
book  has  usually  a  lock  attached  to  it  in  order  that  the  financial  affairs  of  the  business  may  be 
kept  strictly  secret.     These  books  are  placed  under  the  charge  of  the  confidential  bookkeeper. 

The  original  entries  for  this  set  consist  mostly  of  the  footings  of  the  Books  of  Original 
Entry  in  the  different  departments.  The  total  footings  are  rendered  to  the  confidential  book- 
keeper on  report  tickets  which  are  received  daily  from  the  various  departments,  and  from  the 
cashier. 

The  Different  Kinds  op  Stock 

234.  Guaranteed  Stock  is  stock  on  which  the  stipulated  dividend  is  credited  annually.  If 
not  earned  by  the  corporation,  the  dividends  are  carried  over  from  year  to  year  until  earned, 
and  then  paid  to  the  stockholders. 

235.  Preferred  Stock  is  stock  on  which  a  fixed  dividend  is  to  be  paid  before  any  dividends 
on  the  Common  Stock. 

236.  Common  Stock  is  stock  on  which  dividends  are  paid  when  the  net  earnings  of  the 
company  justify  the  dividends  and  the  Directors  choose  to  declare  them. 

237.  Watered  Stock  is  an  expression  sometimes  used  in  referring  to  the  stock  of  corpora- 
tions which  have  issued  stock  in  addition  to  the  original  amount,  and  sold  it  for  a  nominal  con- 
sideration to  the  old  stockholders.  This  is  done  for  various  purposes,  but  generally  with  the 
intention  of  avoiding  some  state  tax  or  assessment  on  the  percentage  of  profits,  or  of  conceal- 
ing from  the' public  the  real  rate  of  profit. 

Note.  —  There  are  other  classes  of  stock,  but  those  named  above  are  the  most  important. 

Corporation  Books  —  how  Opened 

238.  Process  of  opening  a  Corporation  Set  of  Books.  —  From  the  charter  obtain  the  amount 
of  authorized  capital  stock,  the  date  of  tlie  charter,  the  date  of  record,  together  with  the  num- 
ber and  page  of  the  book,  the  names  of  the  subscribers,  and  the  number  of  shares  of  each. 
Then,  from  the  Minute  Book,  ascertain  how  each  subscriber  pays  for  his  stock,  by  referring  to 
the  minutes  of  the  first  formal  meeting  of  the  Directors. 

After  the  items  are  obtained,  proceed  to  open  the  books  as  follows  :  — 

First.  —  Make  a  Journal  entry,  debiting  Subscription  account  and  crediting  Capital  Stock 
account  with  the  authorized  amount  of  capital  stock,  thus  :  — 

Subscription 

Capital  Stock 

Being  the  amount  of  authorized  capital  stock  as  granted  by  the 

Secretary  of  State  of  ._,  consisting  of  

shares,  at  $ a  share. 


162  BUSINESS  PRACTICE 

Second.  —  Make  a  Journal  entry,  debiting  the  original  stockholders'  Stock  accounts  and 
crediting  Subscription  account  with  the  amounts  subscribed,  as  shown  by  the  charter,  thus :  — 

Sundries  Subscription 

Stock,  shares,  @  $ 

Stocli,  shares,  (a)  it^.: 

As    shown   by  the  company's  subscription 

list,  filed  with  the  Secretary  of  State  under  date  of ,  19 , 

the  charter  for  said  company  having  been  recorded ,  19 ,  on 

page in    book of   Corporation   Records  of   the   County  of 

,  State  of . 

Third.  —  If  there  is  unsold  stock  on  hand,  debit  Treasury  Stock  account  and  credit  Sub- 
scription account  with  the  amount,  tlius  :  — 

Treasury  Stock 

Subscription 

shares  at  $ to  be  sold. 

Fourth.  —  Make  entries,  crediting  each  stockholder's  Stock  account  with  the  payment  for 
stock  as  given  in  the  minutes  of  the  first  formal  meeting  of  the  Directors.  This  may  require 
Journal  and  Cash  Book  entries,  all  depending  upon  what  is  given  in  payment  for  the  stock. 
When  these  entries  are  posted  the  entries  for  the  current  business  should  follow. 

SET   IV. —EXERCISES 

General  Instructions.  —  Books  required :  Check  Book,  Deposit  Book,  Bill  Book,  Stock 
Certificate  Book,  Stock  Register,  Dividend  Book,  Sales  Book,  Cash  Book,  Journal,  Ledger, 
Stockholders'  Ledger,  and  25  Voucher  blanks  for  cash  disbursements. 

The  pupil  may  rule  his  own  Stock  Register,  Stockholders'  Ledger,  and  Dividend  Book 
according  to  the  specimen  pages,  allowing  two  pages  for  each  book. 

The  Stock  Certificate  Book  may  be  omitted,  if  desired,  as  the  student  can  write  up  tlie 
Stock  Register  from  the  certificate  memorandum  on  page  153. 

Representative  accounts  used :  Bills  Receivable,  Bills  Payable,  Capital  Stock,  Cash,  Divi- 
dend, Expense,  Insurance,  Interest  and  Discount,  Loss  and  Gain,  Merchandise,  Mileage,  Office 
Furniture,  Rent,  Salary,  Sales,  Surplus,  Subscription,  Teaming,  Traveling  Expense. 

The  name  of  the  corporation  is  the  C.  G.  White  Furniture  Company.  The  officers  are : 
President  and  Treasurer,  C.  G.  White ;  Vice  President,  J.  F.  Andrews ;  Secretary,  W.  H. 
Pierce.     Board  of  Directors:  C.  G.  White,  J.  F.  Andrews,  A.  B.  White,  W.  H.  Pierce. 

C.  G.  White,  the  manager,  is  to  receive  a  salary  of  $500  a  month,  and  W.  H.  Pierce,  the 
secretary  %  150  a  month. 

Manager's  Instructions  to  his  Bookkeeper 

Chicago,  June  1,  19. .. .  —  "The  furniture  business  of  C.  G.  White  &  Co.  was  incorporated 
May  4,  19. . .,  as  the  C.  G.  White  Furniture  Company,  capital  stock,  $50000,  consisting  of  500 
shares  at  $100  per  share,  charter  dated  May  21,  19. . .,  and  recorded  May  31,  19. . .,  on  page  93 
in  book  number  27  of  Corporation  Records  of  the  County  of  Cook,  State  of  Illinois. 
"  Subscribers  are  :  — 

C.  G.  White,  300  shares  $  30000.00 

John  F.  Andrews,  150  shares  15000.00 

A.  B.  White,  49  shares  4900.00 

W.  H.  Pierce,  1  share  100.00 

500  shares  f  50000.00 


CORPORA  TIONS  153 

"As  decided  at  the  meeting  of  the  directors  held  May  31,  the  subscribers  pay  for  their 
stock  as  follows:  C.  G.  White  receives  100  shares  for  $10000  cash,  and  200  shares  for  the 
resources  of  the  old  firm  of  C.  G.  White  &  Co.  as  follows :  — 


Merchandise, 

(Per  inventory) 

$  10000.00 

Office  Furniture, 

(Per  inventory) 

300.00 

People's  Furniture  Co., 

(Balance) 

3500.00 

C.  T.  Wirts  Furniture  Co., 

(Balance) 

2500.00 

Mrs.  G.  B.  Black, 

(Balance) 

500.00 

Monroe  &  Co., 

(Balance) 

3200.00 
$  20000.00 

"  John  F.  Andrews  receives  100  shares  for  $  10000  cash,  and  50  shares  for  a  promissory 
note,  $5000,  of  F.  H.  Sherwood  &  Co.,  Chicago,  in  favor  of  John  F.  Andrews  but  indorsed  to 
this  company  by  him;  dated  May  3,  19...,  at  60  days,  payable  at  the  Third  National  Bank. 
A.  B.  White  receives  49  shares  for  $4900  cash.     W.  H-  Pierce  receives  1  share  for  $100  cash. 

"  This  is  the  memorandum  showing  how  the  certificates  are  to  be  filled  out.  Date  them 
June  1,  19. ...  " 

C.  G.  White,  1  certificate  for  225  shares,  1  certificate  for  50  shares,  1  certificate  for  25  shares. 

John  F.  Andrews,  1  certificate  for  125  shares,  1  certificate  for  25  shares. 

A.  B.  White,  1  certificate  for  49  shares. 

W.  H.  Pierce,  1  certificate  for  1  share. 

"  Deposit  to-day  $  25000. 

"  Write  out  a  check  for  $100  to  the  order  of  Currency,  for  the  cash  drawer." 

June  2.  —  "  Orders  received  :  "  — 

Order  No.  3782.  St.  Paul,  Minn.,  June  1,  19.... 

C.  G.  White  Furniture  Co.,  Chicago. 

Please  ship  at  once:  1  Carved  Wood  Bureau,  @$95;  1  Bird's-eye  Maple  Chamber  Set, 
@  $125 ;  and  charge  to  the  account  of  George  A.  Taylor. 


Order  No.  9675.  St.  Louis,  Mo.,  June  1,  19.... 

C.  G.  White  Furniture  Co.,  Chicago. 

Please  ship  to  George  A.  Fellows,  Springfield,  111. :  10  Combination  Bookcases #617,  @$2S; 
10  Oak  Tables  #53,  @$25;  and  charge  to  our  account.  Wheeler  &  Moore. 


"Send  a  check  for  $350  to  H.  O.  Sweet  &  Co.,  rent  for  June. 

"Let  me  have  a  check  for  $100  to  the  order  of  the  Diebold  Safe  Co.,  to  apply  on  the  safe 
we  bought  yesterday." 

June  4:. — "Telephone  orders  received:  A.  H.  Bell  &  Co.,  Chicago,  30  Rosewood  Arm 
Chairs  at  $10  to  be  delivered  without  fail  to-day.  Erie  Furniture  Co.,  City,  10  Parlor  Room 
Sets  #784.      I  offered  them  a  special  price  on  this  lot  of  furniture,  so  bill  them  at  $90  a  set." 

June  8. — "  What  is  the  balance  in  bank? 

"  Write  out  a  check  for  $  350  to  the  order  of  Moore  Bros,  and  mark  on  the  stub  'Exchanged 
checks.'  Do  not  enter  such  a  transaction  in  the  Cash  Book,  as  it  is  only  an  accommodation. 
This  is  their  check  for  the  same  amount.  Do  not  deposit  it  until  to-morrow,  as  they  do  not 
have  money  sufficient  in  bank  to  meet  it.  This  exchanging  of  checks  is  something  I  dislike 
very  much  to  do.  It  is  assuming  a  great  risk,  for  the  firm  might  make  an  assignment  or 
go  into  the  hands  of  a  receiver  before  paying  their  check." 


154  BUSINESS  PRACTICE 

June  9. — "Has  George- A.  Taylor,  of  St.  Paul,  remitted  for  the  bill  of  furniture  shipped 
him  June  2?  If  he  has  not,  make  a  sight  draft  on  him  for  the  amount  and  draw  through  our 
bank. 

"Deposit  the  check  received  from  Moore  Bros. 

"Have  this  order  shipped  C.O.D." 

Austin,  III.,  June  6,  19.... 

C.  G.  White  Furniture  Co.,  Chicago. 

Please  ship,  via  the  American  Express  :    1  Mahogany  Settee,  @  $  50  ;  and  oblige, 

James  B.  Wood, 

No.  33  Austin  Ave. 


"Mail    a   check   for   i75   to   the    Chicago    Gas   Lt.    &   Coke   Co.,  as  a  deposit  for  gas 
meters." 

June  15.  —  "These  orders  were  received  to-day  :"  — 

Order  No.  39.  Chicago,  June  14,  19.... 

C.  G.  White  Furniture  Co.,  Chicago. 

Please  deliver  to  us  :    25  White  Enameled  Bedroom  Suits,  @  $  125  ;  25  Hair  Mattresses, 
@  $15;    and  charge  to  the  account  of  L^j^^  Shore  Hotel. 


Order  No.  345.  Chicago,  June  14,  19.... 

C.  G.  White  Furniture  Co.,  City. 

Please  deliver  to  our  teamster :    10  White  Enameled  Bedroom  Suits,  @  -1 115  ;    10  Hair 
Mattresses,  @  i  15  ;  and  charge  to  the  account  of  Moore  Bros 


"Stewart  &  Co.  of  New  York  write  that  they  have  drawn  on  us  for  $5000  at  five  days' 
sight  through  the  Third  National  Bank  of  Chicago.  When  the  draft  is  presented  let  me  know, 
as  our  company  will  accept  it. 

"  What  is  the  balance  in  bank  ? 

"  Write  out  a  check  for  $200  to  the  order  of  John  C.  Bird,  our  traveling  agent,  and  charge 
it  to  his  Expense  account. 

"  Let  me  have  $  25.     Make  a  ticket  of  it  and  I  will  report  later." 

June  18.  —  "What  did  the  Third  National  Bank  messenger  present  to  you  just  now? 
You  say  it  is  that  five  days'  sight  draft  for  $5000  from  Stewart  &  Co.?  Very  well,  I  will 
accept  it. 

"Has  the  bank  collected  the  draft  we  drew  on  George  A.  Taylor?  Yes?  For  how  much 
did  the  bank  give  us  credit?  You  say  for  $219.65,  deducting  35  cents  exchange?  Do  not 
fail  to  make  the  proper  entries. 

"Give  A.  B.  White  a  check  for  $200  and  charge  it  to  my  account. 

"While  you  were  at  luncheon,  the  American  Express  Company  delivered  this  C.O.D. 
envelope  for  $50  and  I  signed  for  it.  It  is  the  money  collected  from  James  B.  Wood  for  the 
furniture  shipped  C.O.D.  on  June  9.  I  paid  the  25  cents  express  charges  from  the  cash 
drawer." 

June  23.  —  "Enter  these  two  notes  received  from  the  People's  Furniture  Co.  to  balance 
their  account  to  June  1;  one  for  $1750,  dated  June  3,  at  30  days,  and  another  for  $1750, 
dated  June  22,  at  8  days,  both  notes  bearing  7%  interest,  and  made  payable  at  the  St.  Louis 
National  Bank. 


CORPORA  TIONS  156 

"Is  there  money  enough  in  bank  to  pay  Stewart  &  Co.'s't5000  draft?  Then  write  out  a 
check  for  the  amount,  to  the  order  of  the  Third  National  Bank,  which  holds  it,  and  when  the 
bank  messenger  calls  take  up  the  draft." 

June  28. — ''John  F.  Andrews  has  returned  this  certificate  number  5,  on  the  back  of  which 
he  states  that  he  has  transferred  twenty  shares  to  A.  G.  Blake.  Mr.  Andrews  writes  that 
A.  G.  Blake  wishes  the  twenty  shares  divided  into  two  certificates,  ten  shares  each,  and  that 
he  desires  one  certificate  for  himself  for  the  remaining  five  shares." 

June  29. — "Take  F.  H.  Sherwood  &  Co.'s  note  to  the  bank  and  have  it  discounted, 
but  let  me  indorse  it  first. 

"  What  was  the  amount  of  the  discount  on  F.  H.  Sherwood  &  Co.'s  note?  $2.92?  Then 
make  the  proper  entries." 

June  30.  —  "Have  you  that  cash  ticket  of  mine?  Charge  me  with  il5.  Here  is  the 
remaining  $10.     Be  sure  you  destroy  the  ticket. 

"  Have  this  order  shipped  to-day  :  "  — 

Order  No.  9796.  St.  Louis,  Mo.,  June  28,  19.... 

C.   G.  White  Furniture  Co.,  Chicago. 

Please  ship  via  the  C.  &  A.  R.R. :  50  white  enameled  bedroom  suits,  @  $150;  50  hair 
mattresses,  @  $25;  and  charge  to  the  account  of  Wheeler  &  Moore. 


"Pay  the  stenographer  $75  a  month,  errand  boy  $15,  two  salesmen  $65  each,  and  your- 
self $100.  Have  them  sign  vouchers.  If  you  have  not  money  enough  in  the  drawer  write 
out  a  check  for  what  you  require  and  I  will  sign  it  now.  What  will  be  the  amount  of  the 
check?"     ($245.) 

"  This  check  for  $  1752.71  is  from  the  People's  Furniture  Co.  to  pay  their  note  due  torday. 
Enter  it,  and  then  receipt  the  note  and  mail  it  to  them. 

"  Make  a  memorandum  of  the  salaries  I  shall  give  you  so  that  you  can  make  entries  for 
them:  C.  G.  White  $500  a  month,  W.  H.  Pierce  $150  a  month,  and  John  C.  Bird  $125 
a  month.     Mr.   Bird  began  work  June  15. 

"  Mr.  John  C.  Bird  returned  to-day.  Here  is  his  Expense  Book  for  June  :  Sundry 
items  $65.85,  1500  miles  at  2j^,  $30,  total  expenses  for  June,  $95.85. 

"Give  Mr.  Bird  credit  for  the  remaining  number  of  miles  (500  @  2^,  —  $10)  on  this 
mileage  book  No.  A  45367,  rebate  cover  $  10.     Keep  the  book  in  the  safe  until  he  needs  it  again. 

"  Leave  the  Deposit  Book  at  the  bank  to-day  to  be  balanced. 

"  Close  the  books  this  month  and  let  me  have  the  statements  on  July  5." 


Invoices  received  during  the  Month 


Chicago,  June  6,  19. 


C.  G.  Whitk  Furniture  Co.,  City. 

Bought  of  Erie  Furniture  Co. 
Terms  30  days. 
Our  order  #3568. 

5  Folding  Beds,  @  f  35.00  $  175.00 

10  Hair  Mattresses,  @     15.00  150.00        $325.00 


Chicago,  June  6.  19.... 
C.  G.  White  Furniture  Co.,  City. 

Bought  of  C.  H.  Odell  &  Co. 

6  Curtain  Top  Desks  #370,  @  $15.00  $75.00 

6  Chairs  #87,  @       3.00  15.00  $90.00 


166  BUSINESS  PRACTICE 

New  YoKK,  June  11, 19.... 
C.  G.  White  Furniture  Co.,  Chicago. 

Bought  of  C.  H.  Brown  Furniture  Co. 

60  Cane  Kockers  #205,  @    $3.00  $150.00 


Chicago,  June  27, 19..., 
C.  G.  White  Furniture  Co.,  Chicago. 

To  C.  M.  EoGERs,  Gen'l.  Agent,  Dr. 

Company                                  Amount  Rate  Premium 

Eoyal  Ins.  Co.                          $2500.00  $1.50  $37.50 

Germania  Ins.  Co.                        2500.00  1.50  37.50 

New  Hampshire  Ins.  Co.           2500.00  1.50  37.50 

Hartford  Ins.  Co.                        2500.00  1.50  37.50 

$  150.00 

Chicago,  June  25,  19.... 
C.  G.  White  Furniture  Co.,  City. 

To  Chicago  Gas  Light  &  Coke  Co.  Dr. 

Gas  from  June  2  to  June  25,  $47.50 

Less  20%,  9.50  $38.00 


Date 

Policy  No. 

June    2 

79975 

June    4 

75692 

June  25 

48073 

June  27 

42995 

Chicago,  June  30,  19.... 
G  G.  White  Furniture  Co.,  City. 

To  J.  C.  Pennoyer  &  Co.  Dr. 

1  Wagon  and  1  Horse,  26  days,  @    $2.00  $52.00 

1  Truck  and  2  Horses,  26  days,  @       3.00  78.00        $  130.00 


Chicago,  June  10, 19.... 
C.  G.  White  Furniture  Co.,  City. 
Order  No.  4.  Bought  of  George  Smyth  &  Co. 

3  Bookkeeper  Desks,  @  $12.50  $37.50 

10  Sideboards  #83,  @     10.00  100.00        $137.60 


Grand  Rapids,  Mich.,  June  11,  19.... 
C.  G.  White  Furniture  Co.,  Chicago. 

Bought  of  Phcenix  Furniture  Co. 

10  Turkish  Parlor  Suits  #411,  @  $85.00  $850.00 

Chicago,  June  2, 19.... 
C.  G.  White  Furniture  Co.,  City. 

Bought  of  DiEBOLD  Safe  Co. 
1  Safe  #976,  $125.00 

New  York,  June  11, 19.... 
0    G.  White  Furniture  Co.,  Chicago. 

Bought  of  Stewart  &  Co. 

100  White  Enameled  Bedroom  Suits,       @  $  90.00  $  9000.00 

100  Hair  Mattresses,  @     10.00  1000.00 

$10000.00 

Inventories 

Merchandise $11225.00 

Office  Furniture 400.00 

Mileage 20.00 

,  Interest  accumulated  on  Note      ••••••.  9.19 


CORPORA  TIONS 


157 


Monthly  Bank  Statement 


8  Vouchers  Returned. 
C.  G.  White  Furniture  Co. 

In  Account  Current  with  the  Students'  National  Bank  of  Chicago. 

Checks 

Checks 

Checks 

Checks 

Checks 

19.... 

Depcsits 

100 
350 
100 
350 

200 

75 

5000 

245 

00 
00 
00 
00 
00 
00 
00 
00 

6420 
24146 

00 

73 

(red  ink) 

June 

1 

9 
18 
29 

25000 

350 

219 

4997 

00 
00 
65 
08 

30566 

73 

Bal 

ance 

30566 

73 

June  18,  check  #7,  —  )g2()().O0,  still  out. 

Manager's  Instructions  to  his  Bookkeeper 

July  1.  — "  Here  is  a  letter  and  a  note  from  F.  H,  Sherwood  &  Co.  They  will  not  be  able 
to  meet  their  note  which  becomes  due  on  July  2,  and  ask  us  to  accept  the  inclosed  note,  $5000, 
as  a  renewal,  dated  July  2,  at  30  days,  with  interest  at  7%  per  annum.  We  shall  do  it.  You 
may  give  them  credit  for  the  new  note  and  I  will  write  them.  Let  me  have  the  old  note. 
You  say  it  has  been  discounted?  Then  how  can  we  accommodate  Sherwood  &  Co.,  if  the  old 
note  has  gone  through  the  bank  and  will  be  presented  to  them  for  payment  on  July  2  ?  What 
should  be  done  in  a  transaction  of  this  kind  ?  Look  back  on  the  books  and  see  what 
entry  your  predecessor  made  for  such  a  transaction. 

"  Give  John  C.  Bird  a  check  for  i50.     It  is  for  a  mileage  book. 

"  These  orders  have  been  received  : "  — 

Chicago,  July  1,  19.... 
C.  G.  White  Furniture  Co.,  Chicago. 

Please  deliver  to  us  :  25  Enameled  Bedroom  Suits,  @  $125;  25  Hair  Mattresses,  @  $20; 
and  charge  to  the  account  of  Lake  Shore  Hotel. 


St.  Louis,  Mo.,  June  30, 19.... 
G.  White  Furniture  Co.,  Chicago. 

Please  ship  to  us  :    10  Folding  Beds  #480,  @  $50 ;  10  Hair  Mattresses,  @  $20 ;  5  Combina- 

The  Southern  Hotel  Co. 


C. 


tion  Bookcases,  @  $  23 ;  and  charge  to  the  account  of 


July  5.  — "  What  is  the  balance  in  bank? 

"Mail  Stewart  &  Co.  a  check  for  $3000  to  apply  on  account. 

"Mail  J.  C.  Pennoyer  &  Co.  a  check  for  the  balance  of  our  account. 


158  BUSINESS  PRACTICE 

"  Check  the  statement  of  the  Phoenix  Furniture  Co.,  and  tell  me  the  balance. 


Grand  Rapids,  Mich.,  July  1,  19.... 

C.  G.  White  Furniture  Co., 

Chicago. 

In  account  with  The  PntEisrix  Furkiture  Co. 
19. . . . 

June 

11 
15 

Mdse., 

865 
33 

00 
50 

898 

50 

Note.  • 
account. 


The  pupil  should  copy  the  above  statement  on  a  statement  blank  and  then  check  it  with  the 


"Have  you  checked  the  statement  of  the  Phoenix  Furniture  Co.?  You  say  we  owe  them 
$850  according  to  our  books?  Then  write  out  a  note  for  the  amount,  dating  it  to-day,  at  60 
days,  and  make  it  payable  at  our  office. 

"  Give  John  C.  Bird  tlie  mileage  book.  No.  A  45367,  which  is  in  the  safe. 

"  Mail  C.  M.  Rogers  a  check  for  the  balance  of  our  account. 

"  At  the  meeting  of  the  directors  to-day  a  stockholders'  dividend  of  five  (5)  per  cent 
($  2500)  was  declared.  Make  the  transfer  to  Dividend  account  and  write  up  the  Dividend 
Book  according  to  the  Stockholders'  Ledger.  I  will  notify  the  stockholders  to-day,  by  letter, 
to  call  on  July  6  and  receive  their  dividends." 

Jul^  6.  — "Enter  this  check  for  $2000,  and  this  note  for  $500,  received  from  the  C.  T. 
Wirts  Furniture  Co.,  note  dated  July  6,  at  30  days,  with  interest  at  If),  payable  at  the 
Students'  Bank  of  Detroit.  They  write  that  the  check  and  note  will  balance  the  account. 
Before  entering  them  investigate  and  see  if  the  account  will  balance. 

"  You  may  now  write  out  the  checks  for  the  dividends,  as  the  stockholders  Avill  call  this 
afternoon. 

"Do  not  forget  to  deposit  to-day  the  checks  ($3752.71)  in  the  safe. 

"  Make  transfer  for  this  certificate  number  3,  on  the  back  of  which  you  will  see  that  I 
have  transferred  ten  shares  to  George  P.  Black.  Mr.  Black  desires  one  certificate.  I  wish 
one,  also,  for  the  remaining  fifteen  shares. 

"  John  F.  Andrews  wishes  two  certificates  of  50  shares  each,  and  another  for  25  shares, 
making  a  total  of  125  shares.  These  certificates  are  to  be  issued  in  lieu  of  this  certificate 
number  4  which  he  has  already  indorsed. 

"  Make  transfer  for  this  certificate  number  2,  which  I  have  transferred  to  C.  C.  Campbell.'* 

Jult/  7.  — "Upon  arriving  at  the  office  this  morning  I  discovered  that  our  store  was  partly 
destro3'ed  by  fire.  The  first  thing  to  be  done  is  to  notify  the  different  insurance  companies. 
The  store  will  be  closed  for  a  few  days  until  the  insurance  companies  investigate  the  matter." 


QUESTIONS    FOR   DISCUSSION 

1.  In  transferring  a  certificate  of  stock,  when  does  a  stockholder's  liability  cease?  2.  When  does  an 
original  stockholder's  liability  cease?  3.  Why  has  the  common  stock  of  some  corporations  a  greater  value 
than  the  preferred  stock?  4.  How  can  the  books  of  a  corporation  be  made  to  show  a  surplus  from  which 
dividends  are  declared,  when  in  reality  the  corporation  is  losing  at  the  time  ?  Out  of  what  are  such  dividends 
being  paid  ?  5.  A  corporation  makes  an  assignment,  whereupon  the  assignee  immediately  demands  an  approximate 
statement  of  the  company's  assets  and  liabilities.  Tell  what  accounts  should  be  considered.  6.  What  would 
be  the  first  entry  for  increasing  capital  stock  with  200  shares  at  f  100  per  share  ?  Give  the  entries  for  selling 
100  shares  of  it  to  certain  stockholders  at  75%  of  its  par  value.     How  does  such  a  sale  affect  the  other  stock- 


BANKING  159 

holders?  7.  What  is  the  difference  between  Capital  account  and  Capital  Stock  account?  8.  If  a  corporation 
is  incorporated  for  $  10,0U0  and  only  75%  is  paid  in,  what  can  it  do  in  order  to  issue  "full  paid  and  non- 
assessable "  certificates  without  having  any  more  cash  paid  in  ?  Give  entries.  9.  A  corporation  with  a  capital 
stock  of  !$  10,000  fully  paid  in  wishes  to  reduce  its  authorized  capital,  and  secures  a  certificate  of  decrease 
from  the  Secretary  of  State.  What  entry  should  be  made  for  the  decrease?  10.  Do  all  corporations  require 
that  their  directors  be  stockholders  of  the  company?  11.  IIow  may  a  holder  of  stock  of  a  corporation  receive 
dividends  and  not  have  his  name  appear  on  the  books?'  12.  Can  a  cash  dividend  be  declared  if  the  cash 
balance  on  hand  is  not  equal  to  the  amount 'to  be  paid?  13.  If  a  partnership  business  is  sold  out  for  cash  to  a 
corporation  or  firm,  how  does  this  transaction  affect  the  books?  Explain  in  full  the  steps  taken  to  ascertain 
the  worth  of  the  business.  What  new  account  must  be  opened  to  receive  the  transfers?  From  what  statement 
are  the  transfer  entries  made,  and  what  account  receives  the  totals?  Give  the  Journal  entries  for  the  transfer 
of  all  the  accounts  on  the  statement.  Give  the  entry  for  closing  the  Stock  accounts,  if  the  partners  transfer  their 
interest  to  the  corporation  in  payment  of  shares  of  stock.  14.  A  corporation  is  organized  for  $500,000  to  work 
a  gold  mine  in  Alaska.  A,  who  holds  the  deed  to  the  mine,  transfers  it  to  the  company,  in  payment  of  45,000 
shares  at  $  10  a  share,  f  450,000.  Upon  the  delivery  of  the  certificates,  A  decides  to  give  the  company  2000  shares 
in  consideration  of  one  dollar,  to  assist  in  working  the  mine.  Give  entry  for  the  transfer.  What  account  should 
be  credited,  if  any  of  this  stock  is  sold  ?  And  in  what  way  wou.ld  the  sale  of  this  stock  att'ect  the  profits  of  the 
company  ? 

SECTION  V.     BANKING 

239.  The  business  of  banking  consists  mostly  in  receiving  deposits  of  money,  loaning 
money  by  discounting  notes  and  drafts,  and  collecting  commercial  paper.  It  is  also  a  channel 
through  which  money  is  transmitted. 

The  profits  of  a  bank  are  generally  shown  in  the  following  accounts :  Interest,  Discount, 
Collection,  and  Exchange. 

Banks  are  of  three  kinds :  National,  State,  and  Private  Banks.  National  and  state 
banks  are  incorporated  institutions,  while  private  banks  are  not. 

240.  National  Banks  are  organized  under  a  special  act  of  Congress  and  under  the  laws  of 
the  United  States. 

241.  State  Banks  are  organized  under  the  laws  of  the  state  in  which  they  are  located. 
They  are  known  as  State  or  Trust  and  Savings  Banks. 

Note.  — Mutual  savings  banks  are  incorporated  institutions  but  have  no  stock.  They  are  organized  for  the 
benefit  of  the  depositors.  Their  money  is  supposed  to  be  invested  judiciously  by  the  bank  in  accordance  with  the 
laws  of  the  state.     The  depositors  receive  no  interest,  but  dividends  based  upon  the  net  profits  of  the  bank. 

242.  Private  Banks  are  not  organized  under  any  law,  and  are  operated  by  individuals. 

Bank  Officers 

243.  A  regularly  organized  bank  has  a  Board  of  Directors,  a  President,  and  a  Cashier. 

244.  The  Board  of  Directors  is  composed  of  stockholders  of  the  bank  (except  in  mutual 
savings  banks)  who  oversee  it  and  are  held  responsible  for  its  general  management. 

245.  The  President  is  the  supreme  officer  and  should  be  a  man  of  the  highest  integrity. 
He  presides  at  all  the  meetings  of  the  Directors  and  assumes  sole  authority  during  the  recess. 
He  is  supposed  to  devote  his  entire  time  to  the  interest  of  the  bank. 

246.  The  Cashier,  with  the  exception  of  the  president,  holds  the  most  responsible  position 
in  a  bank,  and  is  required  to  furnish  a  bond  for  the  faithful  performance  of  his  duties.  He  is 
the  first  person  to  be  interviewed  when  one  wishes  to  open  an  account,  to  borrow  money,  or  to 
have  notes  and  drafts  discounted. 

247.  The  Office  Staff  in  a  regularly  organized  bank  is  usually  composed  of  a  Paying 
Teller,   Receiving   Teller,   Discount    Clerk,  Collection   and   Note   Teller,   Foreign    Exchange 


160  BUSINESS  PRACTICE 

Clerk,    Draft   Clerk,    Individual   Bookkeeper,    General    Bookkeeper,   and    Messenger.      The 
number  of  employees  is  regulated  by  the  size  of  the  bank. 

248.  The  Paying  Teller  pays  all  moneys,  certifies  checks,  and  keeps  a  Cash  Book  ruled 
only  with  columns  for  balancing  his  cash.  He  is  responsible  for  all  moneys  paid  out,  and  is 
therefore  supposed  to  be  familiar  with  the  signatures  of  the  depositors,  which  are  on  record  in 
the  bank. 

249.  The  Receiving  Teller  receives  the  deposits  and  enters  in  each  depositor's  Pass  Book 
the  total  amount  deposited.  He  keeps  a  Cash  Book  ruled  only  with  columns  for  balancing  his 
cash. 

250.  The  Discount  Clerk  discounts  all  notes  and  drafts,  writes  up  the  Discount  Register 
and  Tickler,  and  also  enters  the  proceeds  in  depositors'  Pass  Books. 

251.  The  Collection  and  Note  Teller  has  charge  of  the  collection  of  all  notes  and  drafts, 
which  are  entered  in  the  Collection  Register  and  Tickler.  He  writes  up  both  of  these  books 
and  keeps  a  Cash  Book  ruled  only  with  columns  for  balancing  his  cash. 

252.  The  Foreign  Exchange  Clerk  attends  to  all  foreign  business.  He  issues  letters  of 
credit,  buys  and  sells  exchange,  and  is  responsible  for  all  balances  held  in  foreign  countries 
to  the  bank's  credit. 

253.  The  Draft  Clerk  issues  the  bank  drafts  and  the  certificates  of  deposit,  and  also  keeps 
the  registers  containing  the  records  of  them. 

254.  The  Individual  Bookkeeper  has  charge  of  the  Deposit  Ledger  and  sometimes  writes 
up  the  Pass  Books. 

255.  The  General  Bookkeeper  has  the  General  Journal  and  the  General  Ledger  in  charge. 
He  is  the  only  clerk  in  a  bank  who  requires  a  thorough  knowledge  of  bookkeeping,  as  all  the 
other  books  are  elementary  and  readily  understood.  He  is  the  last  clerk  in  a  bank  to  finish 
the  day's  work,  and  he  is  not  supposed  to  leave  the  office  until  a  trial  balance  has  been  obtained 
and  a  statement  rendered  to  the  cashier. 

256.  The  Messenger  (Collector)  is  the  person  who  presents  the  time  drafts  for  acceptance 
and  the.  notes  and  drafts  for  collection,  etc. 

The  Books  —  Their  Use 

257.  The  books  ordinarily  used  in  a  bank  are :  — 

Auxiliary  Books:  Discount  Register,  Discount  Tickler,  Collection  Register,  Collection 
Tickler,  Draft  Register,  Certificate  of  Deposit  Register,  Signature  Book,  Depositors'  Daily 
Balance  Book,  Paying  Teller's  Cash  Book,  Receiving  Teller's  Cash  Book,  Note  Teller's  Cash 
Book. 

Books  of  Entry :   General  Journal,  Deposit  Ledger,  General  Ledger. 

258.  The  Discount  Register  contains  a  record  of  all  the  notes  and  drafts  discounted,  known 
as  "Bills  Discounted"  or  "  Loans  and  Discounts." 

The  Amount,  Discount,  Exchange,  and  Proceeds  columns  are  footed  daily.  These  totals 
are  transferred  to  the  Journal  by  debiting  (on  the  credit  side)  Bills  Discounted  with  the  Amount 
total,  and  crediting  (on  the  debit  side)  Discount  and  Exchange  accounts  with  their  respective 
amounts  and  the  Depositors'  accounts  with  the  items  in  the  Proceeds  column. 

From  this  book  all  notes  and  drafts  are  transferred  to  the  Discount  Tickler  according  to 
the  date  of  maturity. 


BANKING 


If.l 


Discount  Register  (Left-hand  Page) 


No.  Wlieii  Discounted 


For  whom  Disconnted 


Payer 


Address 


Discount  Register  (Right-hand  Page) 


Bate 


Date 


Time 


Dne  Date 


Amount 


Disconnt 


Exchange 


Proceeds 


259.  The  Discount  Tickler  contains  a  record  of  all  the  notes  and  drafts  discounted,  arranged 
according  to  the  date  of  maturity.  Each  page  may  be  divided  into  two  parts,  the  upper  half 
being  reserved  for  the  domestic  paper  and  the  lower  half  for  the  foreign  paper. 


Discount  Tickler 
Monday ,  19_ 


No.  For  whom  Discounted 


Payer 


Address 


Amount 


When  Paid 


260.  The  Collection  Register  contains  a  record  of  all  notes  and  drafts  left  at  the  bank  or 
received  through  the  mail  for  collection.  Transfers  are  made  daily  from  this  book  to  the 
Collection  Tickler. 


Collection  Register  (Left-hand  Page) 


No. 


When  Received 


Payee  or  Indorser 


Drawee  or  Maker 


Where  Payable 


Collection  Register  (Right-hand  Page) 


Date 


Time 


Bate  of 
Interest 


When  Due 


Amount 


Interest 


To  whom  Sent 


162 


BUSINESS  PRACTICE 


261.    The  Collection  Tickler  contains  a  record  of  all  the  notes  and  drafts  for  collection, 
arranged  according  to  the  date  of  maturity. 


Collection  Tickler 
Monday ,  19- 


No. 


For  whom  Collected 


Payer 


Address 


Amount  When  Paid 


262.  The  Draft  Register  contains  a  record  of  the  drafts  drawn  by  the  bank  on  its 
correspondents. 

At  the  close  of  each  day's  business  the  register  is  ruled  and  footed  and  the  amounts  trans- 
ferred to  the  debit  side  of  the  Journal,  crediting  the  correspondents'  accounts  and  Ex- 
change account  with  their  respective  amounts. 

Draft  Register 
New  York  National  Bank 


Date 


No. 


In  Favor  of 


For  Whom 


Amount 


Exchange 


When  Paid 


263.  The  Certificate  of  Deposit  Register.  —  In  this  book  are  recorded  all  certificates  of 
deposit  issued  by  the  bank.  The  total  amount  issued  daily  is  transferred  to  the  debit  side  ot 
the  Journal  and  credited  to  Certificate  of  Deposit  account. 


Certificate  of  Deposit  Register 


Date 


Deposited  by- 


Order  of 


No. 


Amount 


Total 


When  Paid 


264.  The  Signature  Book  or  Card  Index  has  the  signatures  of  all  depositors.     It  is  usually 
in  the  possession  of  the  paying  teller. 

265.  The  Depositors'  Daily  Balance  Book.  — In  this  book  is  entered  daily  each  depositor's 
balance.     It  is  a  reference  book  for  the  cashier  and  paying  teller. 

266.  The  General  Journal  in  the  banking  business  corresponds  to  the  Cash  Book  in  a 
mercantile  business.     In  some  large  banks  the  Journal  is  divided  into  two  books  as  follows  :  — 

1.  The  Debit  Journal  contains  a  record  of  all  the  money  paid  out  and  corresponds  to  the 
credit  side  of  a  Cash  Book. 

2.  The  Credit  Journal  contains  a  record  of  all  the  money  received  and  corresponds  to  the 
debit  side  of  a  Cash  Book. 


BANKING 


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164 


BUSINESS  PRACTICE 


Deposit  Ledger 


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BANKING  165 

267.  The  Deposit  (Individual)  Ledger  contains  the  accounts  of  all  depositors,  also  the 
accounts  pertaining  to  the  depositors,  as  those  of  Certified  Checks  and  Certificates  of  Deposit. 

In  small  banks  an  ordinary  ledger  may  be  used,  but  most  banks  are  now  using  specially 
ruled  ledgers  which  save  labor,  as  they  take  the  place  of  both  a  Book  of  Original  Entry  and  a 
Ledger.  The  one  illustrated  on  p.  164  is  a  specially  ruled  Ledger  whose  accounts  are  immedi- 
ately debited  with  the  checks  as  they  are  cashed,  and  credited  with  the  deposit  slips  as  they 
are  received.  The  aggregate  amount  of  checks  cashed  and  the  total  amount  of  deposits  are 
transferred  daily  from  this  Ledger  to  the  General  Journal.  The  Deposit  account  is  credited  with 
the  total  amount  deposited  and  is  debited  with  the  total  amount  of  checks  cashed.  Black  ink 
entries  in  the  Balance  columns  indicate  balances  on  deposit ;  red  ink  entries  indicate  overdrafts. 

268.  The  General  Ledger  contains  all  the  representative  accounts  and  such  personal  accounts 
as  are  not  in  the  Deposit  Ledger.  From  this  Ledger  is  rendered  daily  a  trial  balance  showing 
the  condition  of  the  bank. 

Collections 

269.  All  notes  and  drafts  received  for  collection  are  numbered  consecutively  and  recorded 
in  the  Collection  Register  and  Tickler.  No  entry  for  such  paper  is  made  in  the  Journal  until 
it  is  paid,  as  the  bank  is  merely  acting  as  an  agent  for  the  owners. 

All  paper  left  with  the  teller  should  be  entered  immediately,  by  him,  under  "  Collections  " 
in  the  back  part  of  the  depositor's  Pass  Book.  When  the  paper  is  paid  the  amount  is  crossed 
out  under  "  Collections  "  and  the  proceeds  entered  under  the  deposits  in  the  front  part  of  the 
Pass  Book. 

270.  The  commercial  paper  handled  by  the  bank  is  divided  into  two  classes : 

1.  Domestic  paper  consists  of  notes  and  drafts  payable  in  the  city. 

2.  Foreign  paper  consists  of  notes  and  drafts  payable  out  of  the  city. 

The  Daily  Report  Tickets 

271.  In  large  banks  each  department  is  required  to  render  to  the  general  bookkeeper  a 
Report  Ticket,  consisting  of  totals  taken  from  its  books.  From  the  tickets  the  general  book- 
keeper makes  his  Journal  entries,  and  also  proves  each  clerk's  book.  This  is  done  in  a  book 
called  the  "  Scratcher,"  a  common  book  with  columns  ruled  for  figures. 

SET   V.     EXERCISES 

The  following  exercises  consist  principally  of  the  banking  transactions  in  the  four  previous 
sets,  but  under  different  dates.  These  will  enable  the  pupil  to  trace  readily  the  routine  of 
the  transactions  between  the  various  firms  and  their  banker. 

It  is  assumed  that  the  bank  has  been  in  existence,  so  that  the  work  is  from  the  first  of  the 
year  with  new  Ledgers,  etc.     The  bank  is  called  the  "Students'  National  Bank  of  Chicago." 

General  Instructions. — Books  required:  Discount  Register,  Discount  Tickler,  Collection 
Register,  Collection  Tickler,  Draft  Register,  Certificate  of  Deposit  Register,  General  Journal, 
Deposit  Ledger,  General  Ledger. 

The  pupil  may  rule  the  auxiliary  books  named  above  according  to  the  specimen  pages. 
He  should  copy  in  ordinary  Ledgers  the  faces  of  the  General  Ledger  and  of  the  Deposit 
Ledger,  as  they  appear  in  the  exercises.  He  should  also  copy  the  Discount  Register  and  the 
Discount  Tickler  in  their  respective  books,  and  then  proceed  with  the  transactions. 

:  In  arranging  the  Journal  mark  the  left-hand  pages  "  Credit  Journal "  and  the  right-hand 
pages  "Debit  Journal."  Name  the  money  columns  on  each  page  as  follows  :  "Collection  and 
Exchange,"  "Deposits,"  and  "General.'* 

When  posting  to  the  Deposit  Ledger  write  in  the  explanation  of  each  entry.  Devote  to 
eack  account  about  one  third  of  a  page. 


166 


BUSINESS  PRACTICE 


General  Ledger  D  of  Students'  National  Bank 
CAPITAL   STOCK 


19. 


Jan.      1     Balance 


100000 


00 


REAL   ESTATE 


19 


Jan.      1     Balance 


L     C 


40000  00 


CASH 


19 


Jan.      1     Balance 


27975 


00 


FURNITURE   AND    FIXTURES 


19- 


Jan.      1     Balance 


L    C  3435  00 


UNITED   STATES   BONDS 


19. 


Jan.      1     Balance 


L    C        25000  00 


BANKING 


167 


General  Ledger  D  —  Continued 
STOCKS  AND   SECURITIES 


19 


Jan.      1     Balance 


L    C        24275  25 


BILLS  DISCOUNTED 


19 


Jan.      1     Balance 


L    C        18655  00 


SURPLUS  FUND 


19. 


Jan.      1     Balance 


20000 


00 


PROFIT  AND   LOSS 


19. 


Jan.      1     Balance 


C 


9781 


12 


DEPOSITS 


19. 


Jan.      1     Balance 


L    C        28758  40 


168 


BUSINESS  PRACTICE 


General  Ledger  D — Continued 
ST.    LOUIS   NATIONAL   BANK 


19 


St.  Louis,  Mo. 


Jan.      1     Balance 


L    C 


1500  00 


KANSAS   CITY   BANK 


19 


Kansas  City,  Mo. 


Jan.      1 


Balance 


L    C  864  00 


NEW  YORK   NATIONAL   BANK 


19 


Jan.      1     Balance 


L    C        11760  27 


SAN    FRANCISCO   NATIONAL   BANK 


19  _ 


San  Francisco,  Col. 


Jan.      1     Balance 


L    C  5075  00 


Deposit  Ledger  D 
H.    B.    CLAY   &   CO. 


19 


Jan.      1     Balance 


L    C 


5500  00 


BANKING 


169 


Deposit  Ledger  D  —  Continued 
A.    M.    CHASE   &   CO. 


19 


Jan.      1     Balance 


L    C  3000  00 


C.    H.    SMITH   &   CO. 


19 


Jan.      1     Balance 


L     C        10000  00 


C.    G.    "WHITE   FURNITURE    CO. 


19-^. 


Jan.      1     Balance 


5000 


00 


D.    C.    STUDENT 


19. 


Jan.      1     Balance 


3000 


00 


JOHN   STETATART 
19 


Jan.      1     Balance 


L     C  2000  00 


170 


BUSINESS  PRACTICE 


Deposit  Ledger  D  —  Continued 
REID,    SMITH   &   SONS 


19 


Jan.      1     Balance 


165 


80 


GEORGE   BEECHER   &   SON 


19 


Jan.      1     Balance 


L     C 


5  93 


CARTER   &   BRO"WN 


19 


Jan.      1     Balance 


L    C 


10  87 


CERTIFIED   CHECKS 


19. 


Jan.      1     Balance 


75 


80 


Discount  Register  (Left-hand  Page) 

No. 

'When  Disooimted 
19 

For  whom  Discounted 

Payer 

Address 

687 

Dec. 

14 

Reid,  Smith  &  Sons 

A.  B.  Rider  &  Son 

St.  Louis,  Mo. 

688 

14 

George  Beecher  &  Co. 

Merrill  &  Co. 

Chicago 

689 

15 

C.  B.  White 

Carter  &  Brown 

Chicago 

690 

15 

Students'  Clothing  Co. 

A.  M.  Grey 

St.  Louis,  Mo. 

691 

15 

Lake  Shore  Hotel 

George  B.  Snow 

Kansas  City,  Mo. 

692 

18 

Carter  &  Brown 

S.  B.  Mason  &  Co. 

Chicago 

BANKING 


171 


Discount  Tickler 
Thursday,  January  3,  19 


No. 


687 
688 
689 


For  whom  Discounted 


Reid,  Smith  &  Son 
George  Beecher  &  Co. 
C.  B.  White 


Payer 


A.  B.  Rider  &  Son 
Merrill  &  Co. 
Carter  &  Brown 


Address 


St.  Louis,  Mo. 

Chicago 

Chicago 


Amoont 


2800 
1780 
4500 


00 
00 
00 


When  Paid 


Friday,  January  4 

,  19.... 

No. 

For  whom  Discounted 

Payer 

Address 

Amount 

When  Paid 

690 
691 

Students'  Clothing  Co. 
Lake  Shore  Hotel 

A.  M.  Grey 
George  B.  Snow 

St.  Louis,  Mo. 
Kansas  City,  Mo. 

3900 
675 

00 
00 

Saturday,  January  5,  19 

No. 

For  whom  Discounted 

Payer 

Address 

Amount 

When  Paid 

692 

Carter  &  Brown 

S.  B.  Mason  &  Co. 

Chicago 

5000 

00 

Discount  Register  (Right- 

hand 

Page) 

Date 
19_- 

Bate 

Time 

Due  Date 

19 

Amount 

Amount  Discount 

Exchange 

Proceeds 

Dec. 

4 

7% 

30  days 

Jan. 

3 

2800 

00 

10 

88 

8 

28 

278o|84 

Nov. 

19 

7% 

45     « 

3 

1780 

00 

6 

91 

1773,09 

Nov. 

29 

6% 

35     " 

3 

4500 

00 

14 

25 

448575 

Dec. 

10 

6% 

25     " 

4 

3900 

00 

13 

00 

8 

25 

3878  75 

Dec. 

5 

6% 

30     " 

4 

675 

00 

2 

25 

1 

84 

67091 

Dec. 

6 

7% 

30     « 

5 

5000 

00 

17 

50 

498250 

18655 

00 

64 

79 

18 

37 

18571 84 

172 


BUSINESS  PRACTICE 


Duties  of  Bank  Clerks 

Wednesday,  January  2,  19 

Receiving  Teller  received  cash  to-day  as  follows  :  — 


Deposit  Slips  and  Memos,  on  Spindle 


H.  B.  Clay  &  Co. 


A.  M.  Chase  &  Co. 

C.  G.  White  Furniture  Co. 

Students'  Clothing  Co. 

George  Beecher  &  Co. 

Exchange  (on  checks) 
Paying  Teller  paid  out  cash  to-day  as  follows  :  — 


Deposit  Slip, 

125.00 
80.00 

275.00 

480.00 

Deposit  Slip, 

75.00 

Deposit  Slip, 

10000.00 

10000.00 

20000.00 

Deposit  Slip, 

200.00 

200.00 

400.00 

Deposit  Slip, 

75.00 

125.00 

200.00 

Teller's  Memo. 

6.50 

■  H.  B.  Clay  &  Co. 
A.  M.  Chase  &  Co. 
C.  G.  White  Furniture  Co 
C.  H.  Smith  &  Co. 
C.  H.  R.  «&  Co.  (two  desks) 


Checks  and  Memos,  on  Spindle 

Checks,      25.00,    50.00,    35.00,  300.00 
Checks,       50.00,  150.00,    13.50,    65.00,  75.00 
Checks,     100.00,  350.00,  100.00,  350.00 
Checks,     100.00,  150.00,    75.00 
Voucher  #1376,  125.00 


January  3 

Discount  Clerk  received  word  that  Discount  No.  687  has  been  paid  and  credited  to  our 
account  by  the  St.  Louis  National  Bank.  (Credit  Bills  Discounted  with  $2800  and  debit 
St.  Louis  National  Bank.     Mark  it  paid  on  Discount  Tickler.) 

Received  Merrill  &  Co.'s  check  for  '11780  to  pay  Discount  No.  688;  Carter  &  Brown's- 
check  for  84500  to  pay  Discount  No.  689. 

Paying  Teller  paid  out  cash  to-day  as  follows:  — 


C.  H.  Smith  &  Co. 
H.  B.  Clay  &  Co. 
A.  M.  Chase  &  Co. 
Reid,  Smith  &  Son 


Checks  and  Memos,  on  Spindle 

Checks,  185.00,  200.00,    75.00 

Checks,  350.00,    50.00,    25.00,  50.00 

Checks,  1000.00,  125.00,  500.00 

Certified  check,     75.80 


Receiving  Teller  received  cash  to-day  as  follows: 


C.  H.  Smith  &  Co. 

Carter  &  Brown 
H.  B.  Clay  &  Co. 


Deposit  Slips  and  Memos,  on  Spindle 

Deposit  Slip,  1000.00 

2441.67 


Deposit  Slip, 
Deposit  Slip, 


35.50 
414..50 


3441.67 
5100.00 

450.00 


BANKING  173 

C.  G.  White  Furniture  Co.  Deposit  Slip,  350.00 

Exchange  (on  checks)  Teller's  Memo.  2.75 

Collection  Teller  received  from  C.  G.  White  Furniture  Co.  for  collection  a  sight  draft, 
dated  January  3,  drawn  on  George  A.  Taylor,  St.  Paul,  Minn.,  for  -$220.  Collection  No.  700. 
Mailed  it  to  St.  Paul  Bank. 

Draft  Clerk  received  C.  H.  Smith  &l  Co.'s  check  for  $1000  for  a  San  Francisco  draft  made 
to  their  order.  Issued  draft  on  the  San  Francisco  National  Bank  for  |5 1000  ;  exchange  on 
same  $4. 

January  4 

Paying  Teller  paid  out  cash  to-day  as  follows :  — 

Checks  and  Memos,  on  Spindle 

H.  B.  Clay  &  Co.  Checks,  4000.00,    50.00 

Carter  &  Brown  Checks,  35.00,  100.00,    67.50 

John  Stewart  &  Co.  Checks,  55.00,  250.00, 250.00 

C.  H.  Smith  &  Co.  Check,  183.00 

Receiving  Teller  received  cash  to-day  as  follows :  — 

Deposit  Slips  and  Memos,  on  Spindle 

Carter  &  Brown  Deposit  Slip,  97.80 

Reid,  Smith  &  Son  Deposit  Slip,  200.00 

Exchange  Teller's  Memo.  1.35 

St.  Louis  National  Bank  draft  :f^2678  on  New  York  City  Bank,  $4300. 

January  5 
Receiving  Teller  received  cash  to-day  as  follows :  — 

H.  B.  Clay  &  Co.  Deposit  Slip,  625.00 

Paying  Teller  paid  out  cash  to-day  as  follows  :  — 

Checks  and  Memos,  on  Spindle 

A.  M.  Chase  &  Co.  Checks,         230.00,  50.00,  50.00 

John  Stewart  &  Co.  Check,  250.00 

Discount  Clerk  has  been  informed  that  the  St.  Louis  National  Bank  has  received  remit- 
tance for  Discount  No.  690,  $  3900,  and  has  placed  it  to  our  credit. 

Received  advices  from  the  Kansas  City  Bank  that  Discount  No.  691  has  been  paid  and 
placed  to  our  credit. 

Received  Mason  &  Co.'s  check  for  $5000  to  pay  Discount  No.  692. 

January  7 

Collection  Teller  received  a  New  York  draft  for,  1 220  from  the  St.  Paul  Bank  for  Col- 
lection No.  700.     Proceeds,  $219.65  ;  exchange,  35  cents. 

Draft  Clerk  mailed  for  deposit  to  the  New  York  National  Bank  drafts  as  follows :  St.  Paul 
Bank  on  New  York  National  Bank  for  1 220,  St.  Louis  National  Bank  on  New  York  City 
Bank  for  $4300  ;  total  deposit,  $4520. 


174  BUSINESS  PRACTICE 

Receiving  Teller  received  cash  to-day  as  follows :  — 

Deposit  Slips  and  Memos,  on  Spindle 

H.  B.  Clay  «&  Co.  Deposit  Slip,  550.00 

A.  M.  Chase  &  Co.  Deposit  Slip,  350.00 

'  Collection  Teller  received  for  collection,  from  C.  H.  Smith  &  Co.,  a  five  days'  sight  draft, 
dated  January  7,  drawn  on  the  Golden  Gate  Electric  Light  Co.,  San  Francisco,  Cal.,  for 
$  5000.     Mailed  draft  to  the  San  Francisco  National  Bank. 

Received  for  collection  from  the  New  York  National  Bank,  C.  Johnson  &  Co.'s  five  days' 
sight  draft,  dated  January  5,  drawn  on  H.  B.  Clay  &  Co.,  Chicago,  for  $292.50.  The  drawee 
accepted  the  draft  upon  presentation  to-day,  payable  at  this  bank. 

Discount  Clerk  received  from  the  cashier,  to  be  discounted  (at  7%)  for  A.  M.  Chase  &  Co., 

note  for  $200,  dated  January  7,  19 ,  at  20  days,  signed  by  M.  A.  Cook  &  Co.  and  indorsed 

by  A.  M.  Chase  &  Co.,  payable  at  the  Third  National  Bank,  Chicago.  Proceeds,  $199.22.  Dis- 
count, 78  cents. 

Paying  Teller  paid  out  cash  to-day  as  follows :  — 

Checks  and  Memos,  on  Spindle 
C.  G.  White  Furniture  Co.  Checks,         75.00,  200.00,  5000.00,  245.00 

January  9 

Receiving  Teller  received  for  deposit,  from  A.  M.  Chase  &  Co.,  their  sight  draft  (O.K.M 
by  the  cashier),  dated  January  9,  drawn  on  the  Sheboygan  National  Bank,  Sheboygan, 
Wis.,  for  $786.28.  Entered  the  amount  in  the  depositor's  book,  etc.  Mailed  the  draft  to 
the  Sheboygan  Bank. 

Paying  Teller  paid  out  cash  to-day  as  follows :  — 

Checks  and  Memos,  on  Spindle 
H.  B.  Clay  &  Co.  Checks,         500.00,  410.00,  38.80,  37.50 

Receiving  Teller  received  cash  to-day  as  follows :  — 

Deposits  and  Memos,  on  Spindle 

H.  B.  Clay  &  Co.  Deposit  Slip,  254.98 

400.00 
25.00 
57.50  737.48 


January  10 
Paying  Teller  paid  out  cash  to-day  as  follows :  — 

Checks  knd  Memos,  on  Spindle 

H.  B.  Clay  &  Co.  Checks,  4140.00,     26.50,  70.00 

A.  M.  Chase  &  Co.  Checks,  10.80,  500.00,  37.50,  100.00 

Stamps  Voucher  #1377,  10.00 


BANKING  175 

January  11 
Receiving  Teller  received  cash  to-day  as  follows:  — 

Deposit  Slips  and  Memos,  on  Spindle 
H.  B.  Clay  &  Co.  Deposit  Slip,  700.00 

214.34 
800.00  1714.34 

Reid,  Smith  &  Son  Deposit  Slip,  200.00 

H.  B.  Clay  &  Co.  Deposit  Slip,  225.00 

Paying  Teller  certified  Reid,  Smith  &  Son's  check  for  $200  and  placed  on  the  spindle 
a  debit  memorandum  for  it, 

January  12 

Paying  Teller  paid  out  cash  to-day  as  follows  :  — 

Checks  and  Memos,  on  Spindle 

A.  M.  Chase  &  Co.  Checks,         40.00,  50.00,  460.00,  150.00 

H.  B.  Clay  &  Co.  '    Debit  Memo,  (check  certified),       900.00 

Receiving  Teller  received  cash  to-day  as  follows:  — 


H.  B.  Clay  &  Co. 
Reid,  Smith  &  Son 
Students'  Clothing  Co. 


Deposit  Slips  and  Memos,  on 

Spindle 

Deposit  Slip, 

459.27 

238.50 

697.77 

Deposit  Slip, 

375.00 

400.00 

77-5.00 

Deposit  Slip, 

300.00 
225.00 

700.00 

1225.00 

Teller's  Memo. 

■  1.75 

Exchange  (on  checks) 

Collection  and  Note  Teller  has  been  advised  that  the  San  Francisco  National  Bank  received 
a  check  for  Collection  No.  701,  and  placed  same  to  our  credit.  Proceeds,  $4987.50;  exchange, 
$12.50. 

Received  a  check  from  H.  B.  Clay  &  Co.  for  $292.50  to  pay  Collection  No.  702. 

January  14 
Receiving  Teller  received  cash  to-day  as  follows :  — 


John  Stewart  &  Co. 
H.  B.  Clay  &  Co. 
C.  H.  Smith  &  Co. 
H.  B.  Clay  &  Co. 

Draft  Clerk  issued  certificates  of  deposit  as  follows :  — 

John  D.  Hyde  deposited  $250.     Issued  certificate  of  deposit  to  the  order  of  himself. 
C.  M.  Madison  deposited  $1500.       Issued  certificate  of   deposit   to  the  order   of   Clara 
Brown. 

M.  White  deposited  $1500.     Issued  certificate  of  deposit  to  the  order  of  S.  C.  Graham. 


Deposit  Slips  and  Memos,  on  Spindle 

Deposit  Slip, 

440.00 

Deposit  Slip, 

100.00 

Deposit  Slip, 

1000.00 

Deposit  Slip,                200.00 

33.32 

233.32 

176  BUSINESS  PRACTICE 

Paying  Teller  paid  out  cash  to-day  as  follows  :  — 

Checks  and  Memos,  on  Spindle 

C.  H.  Smith  &  Co.  Checks,        800.00,  2280.00,  37.50 

John  Stewart  &  Co.  Checks,  60.00,       22.00 

H.  B.  Clay  &  Co.  Certified  Check,  900.00 

H.  B.  Clay  &  Co.  Checks,        150.00,     300.00 

C.  H.  Smith  &  Co.  Checks,  28.50,        3.50,  85.00,     75.00 

D.  C.  Student  Checks,        250.00,      55.00,  60.00,  250.00 

Discount  Clerk  received  from  the  cashier  for  discount  the  following  notes  :  — 

H.  B.  Clay  &  Co.  note    for   $1000,  dated  January   14,   19 ,  at  30  days.     Proceeds, 

$994.17.     Discount,  $5.88. 

C.  G.  White  Furniture  Co.   note  for  $5000,  dated  November   18,  19 (last  year), 

at  60  days,  signed  by  F.  H.  Sherwood  &  Co.  and  indorsed  by  C.  G.  White  Furniture  Co., 
payable  at  the  Third  National  Bank,  New  York.     Proceeds,  $4997.08.     Discount,  $2.92. 

January  16 
Paying  Teller  paid  out  cash  to-day  as  follows  :  — 

Checks  and  Memos,  on  Spindle 

C.  H.  Smith  &  Co.  Checks,  4.00,     75.00,  100.00,  183.00 

D.  C.  Student  Checks,         37.93,  100.00 

Receiving  Teller  received  for  deposit,  from  C.  H.  Smith  &  Co.,  their  sight  draft  (O.K.'d 
by  the  cashier),  dated  January  16,  19----.,  drawn  on  the  San  Francisco  National  Bank  for 
$79.50.  Have  entered  the  amount  on  the  depositor's  book.  Mailed  the  draft  to  the  San 
Francisco  National  Bank. 

Draft  Clerk  received  a  check  for  $200.50,  from  Reid,  Smith  &  Co.,  for  a  New  York  draft 
in  favor  of  D.  S.  Burke.     Draft,  $200;  exchange,  50  cents. 

Receiving  Teller  received  remittances  to-day  from  our  correspondents  as  follows :  — 

Drafts  on  Spindle 

St.  Louis  Nat'l  Bank,  Draft  j^  2996  on  the  New  York  City  Bank  for  3900.00 

Kansas  City  Bank,  Draft  #378  on  the  Third  Nat'l  Bank  of  New  York  for    1500.00 

San  Francisco  Nat'l  Bank,     Draft  # 678  on  the  New  York  City  Bank  for  9000.00 

Draft  Clerk  mailed  drafts  to  the  New  York  National  Bank  for  deposit,  as  follows  :  — 

St.  Louis  Nat'l  Bank  on  the  New  York  City  Bank,  3900.00 

Kansas  City  Bank  on  the  Third  Nat'l  Bank,  New  York,      1500.00 
San  Francisco  Nat'l  Bank  on  the  New  York  City  Bank,      9000.00 


PART    Y.     APPENDIX 

SECTION  I.     CLEARING  HOUSES 

272.  A  Bank  Clearing  House  is  an  association  of  banks,  organized  and  conducted  under 
proper  rules  and  regulations,  for  the  purpose  of  facilitating  daily  settlements  of  balances 
among  banks.  Most  of  the  trade  centers  have  clearing  houses.  The  banks  in  small  towns 
clear  through  those  in  neighboring  cities  belonging  to  the  association. 

273.  The  Settling  Clerk  in  a  bank  is  the  one  who  has  charge  of  the  clearing  house  work. 
He  receives  during  the  day  the  exchanges,  consisting  of  checks,  bank  drafts,  and  certificates  of 
deposit.  These  are  assorted  according  to  the  banks  at  which  they  are  made  payable,  by  placing 
them  in  different  compartments.  At  the  close  of  the  day  the  exchanges  of  each  bank  are  summed 
up,  and  next  morning  the  exchanges  coming  in  before  10:30  are  added  to  the  amount.  They 
are  then  strapped  and  their  aggregate  amounts  entered  on  the  clerk's  statement,  thus :  — 


No.  3. 


CHICAGO    CLEARING   HOUSE 

FROM 

COMMERCIAL  NATIONAL   BANK 


Clerk's  Statement. 



19 

No. 
1 

Banks 

Dr.  Amounts 

Beceipts 

First  National  Bank 

723 

149 

55 

1 

2 

Merchauts'  National  Bank 

15 

900 

00 

2 

3 

Commercial  National  Bank 

3 

4 

Merchants'  Loan  and  Trust  Co. 

89 

675 

00 

4 

5 

Corn  Exchange  National  Bank 

122 

250 

75 

5 

6 

Metropolitan  National  Bank 

90 

500 

00 

6 

7 

Hibernian  Banking  Association 

14 

800 

00 

7 

8 

Bank  of  Montreal 

10 

700 

00 

8 

9 

Union  Trust  Co. 

31 

600 

00 

9 

10 

Chicago  National  Bank 

69 

950 

50 

10 

11 

Continental  National  Bank 

139 

950 

00 

11 

12 

Fort  Dearborn  National  Bank 

11 

785 

00 

12 

13 

National  Bank  of  the  Republic 

33 

090 

00 

13 

14 

Bankers'  National  Bank 

35 

475 

00 

14 

15 

Northern  Trust  Co. 

45 

800 

00 

15 

16 

Illinois  Trust  and  Savings  Bank 

31 

750 

50 

16 

1 

466 

376 

30 

274.  Pursuant  to  custom  the  settling  clerk  and  his  messenger  call  at  the  clearing  house, 
with  the  exchanges.  Here  the  settling  clerk  presents  his  credit  ticket  to  the  manager,  who 
at  once  enters  it  on  the  Clearing  House  Proof  Sheet. 

177 


178 


APPENDIX 
Credit  Ticket 


Bank  ISTo.  3.                                                            Chicago, 19 

O 

'A 

l-H 

Credit 

P3 

Commercial  National  Bank,                                        f     l|466|376|30i| 

Amount  of  exchanges  to  Clearing  House  this  day  per  messenger. 

o 

a 
o 

Teller. 

275.  At  11  o'clock  the  signal  is  given  to  "  clear,"  whereupon  the  messenger  delivers  the 
exchanges  payable  by  each  bank  to  the  settling  clerk  of  that  bank,  who  receipts  for  them  on 
the  clerk's  statement,  under  "  Receipts  "  (see  clerk's  statement,  page  177). 

When  the  exchanges  have  all  been  distributed  each  settling  clerk  writes  up  his  statement 
and  ascertains  how  his  bank  stands  with  the  clearing  house,  thus :  — 


No.  3.  CHICAGO   CLEARING   HOUSE 

COMMEECIAL  NATIONAL  BANK 

Settling  Clerk's  Statement. 


.19- 


Debit  Balance 

No. 

Banks 

Credit  Balance 

Banks  Debit 

Banks  Credit 

No. 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

First  National  Bank 
Merchants'  National  Bank 
Commercial  National  Bank 
Merchants'  Loan  and  Trust  Co. 
Corn  Exchange  Natignal  Bank 
Metropolitan  National  Bank 
Hibernian  Banking  Association 
Bank  of  Montreal 
Union  Trust  Co. 
Chicago  National  Bank 
Continental  National  Bank 
Fort  Dearborn  National  Bank 
National  Bank  of  the  Eepublic 
Bankers'  National  Bank 
Northern  Trust  Co. 
Illinois  Trust  and  Savings  Bank 

723 
15 

89 
122 
90 
14 
10 
31 
69 
139 
11 
33 
35 
45 
31 

149 
900 

675 
250 
500 
800 
700 
600 
950 
950 
785 
090 
475 
800 
750 

55 
00 

00 
75 
00 
00 
00 
00 
50 
00 
00 
00 
00 
00 
50 

525 
9 

49 

140 

38 

10 

8 
45 
50 
75 
14 
22 
30 
29 
30 

950 
780 

965 
156 
330 
750 
090 
000 
700 
760 
800 
900 
000 
500 
750 

00 
00 

00 
30 
00 
00 
00 
00 
00 
50 
00 
75 
00 
06 
00 

1 

2 

3 

4 

5 

6 

7 

8 

9 

30 

11 

12 

13 

14 

15 

16 

Total 
Clearings 

Footings 

1 

466 

376 

30 

1 

082 

432 

55 

Balance 

383 

943 

75 

Proof 

1 

466 

376 

30 

Note.  —  The  Debit  Balance  column,  in  the  settling  clerk's  statement,  is  for  the  balances  due  to  the  clearing 
house.  The  Credit  Balance  column  is  for  the  balances  due  from  the  clearing  house.  The  Banks  Debit  column 
contains  the  amounts  of  exchanges  which  the  Commercial  National  Bank  brings  and  delivers  to  the  other  banks; 
these  should  agree  with  the  amounts  on  the  clerk's  statement  (page  177).  The  Banks  Credit  column  contains  the 
amounts  of  exchanges  which  the  Commercial  National  Bank  receives  from  other  banks. 


CLEARING  HOUSES 


179 


276.  If  the  total  of  the  "Banks  Credit"  is  in  excess  of  the  "Banks  Debit,"  the  bank  in 
question  owes  the  clearing  house,  but  if  tlie  total  of  the  "  Banks  Debit "  is  in  excess,  the  clear- 
ing house  owes  the  bank.  When  the  balance  is  determined  the  settling  clerk  at  once  fills  out  a 
balance  ticket  showing  the  aggregate  amounts  brought  and  received,  together  with  the  balance, 
and  presents  the  ticket  to  the  manager  for  settlement. 


H 
W 
til 
O 

H 

W 
O 

< 
pq 

No.  3. 

Chicago  Clearing  House, 

Amount  Received,  $ 
Amount  Brought,    f 

19..._ 

1 082  432  55 
1466  376.30 

Debit  1 

Balance  Due  Clearing  House. 

Credit  Balance  Due  Commercial  National  Bank,     .$ 

,     A 

383  943  75 

Settling  Clerk. 

277.  When  the  manager  has  received  all  the  balance  tickets  he  proves  the  Clearing  House 
Proof  Sheet,  and  if  it  is  correct  the  settling  clerks  are  dismissed.  The  banks  which  have  debit 
balances  are  given  until  12.30  (except  Saturdays,  when  it  is  11.30)  to  pay  these  balances  to 
the  manager,  who  afterward  pays  the  credit  banks  their  balances. 


CLEARING   HOUSE   PROOF 

Chicago, 


.19.... 


Settle- 
ment 


No. 


Banks 


Balance  Dne 

to  Clearing 

House 


Banks  Dr. 


Banks  Cr 


Balance  Dne 
to  Banks 


No. 


Settle- 
ment 


First  National  Bank 
Merchants'  National  Bank 
Commercial  National  Bank 
Merchants'  Loan  and  Trust  Co. 
Corn  Exchange  Nat.  Bank 
Metropolitan  National  Bank 
Hibernian  Banking  Association 
Bank  of  Montreal 
Union  Trust  Co. 
Chicago  National  Bank 
Continental  National  Bank 
Foi-t  Dearborn  National  Bank 
National  Bank  of  the  Republic 
Bankers'  National  Bank 
Northern  Trust  Co. 
Illinois  Trust  &  Savings  Bank 


1082 


432 


55 


1466 


376 


30 


383 


943 


75 


180  APPENDIX 

278.  Passage  of  a  Check  from  the  maker  through  the  banks  and  the  clearing  house. 

1.  A  gives  to  B  a  check  for  $200  on  the  First  National  Bank  of  Chicago. 

2.  B  deposits  the  check  in  his  bank  (Commercial  National  Bank  of  Chicago)  by  present- 
ing it  at  the  window  of  the  receiving  teller. 

3.  The  receiving  teller,  after  entering  the  amount  of  the  check  in  B's  Pass  Book,  passes  the 
check  to  the  clearing  house  department,  and  also  passes  the  deposit  ticket  to  the  individual 
bookkeeper. 

4.  The  individual  bookkeeper  credits  B's  account  with  the  amount  of  the  check,  from  the 
deposit  ticket. 

■  5.  The  clerk  in  the  clearing  house  department  files  the  check  in  the  compartment  of  the 
First  National  Bank,  and  registers  it  under  the  proper  name,  either  in  a  book  or  on  a  slip 
through  a  registering  machine.  The  check  is  then  strapped  in  with  the  other  checks  on  the 
First  National  Bank,  ready  to  be  taken  to  the  clearing  house. 

6.  At  the  clearing  house  the  package  is  handed  to  the  settling  clerk  of  the  First  National 
Bank,  who  receipts  for  it  on  the  clerk's  statement  of  the  Commercial  National  Bank.  (See 
page  177.) 

7.  The  settling  clerk  of  the  First  National  Bank,  upon  his  return,  assorts  what  he  has 
received  at  the  clearing  house,  according  to  the  bookkeepers,  and  enters  the  exchanges  in  a 
book  to  prove  that  the  amount  charged  to  his  bank  is  correct.  The  exchanges  are  then  passed 
on  to  the  individual  bookkeepers. 

8.  The  individual  bookkeeper  of  the  First  National  Bank  passes  the  check  on  to  the  pay- 
ing teller,  who  "  passes  on  it "  and,  finding  the  check  genuine,  returns  it  for  entry.  When  the 
check  is  returned,  the  individual  bookkeeper  charges  A's  account  with  the  amount  and  passes 
the  check  on  to  the  statement  clerk. 

9.  The  statement  clerk  records  the  amount  on  the  monthly  statement  of  the  maker  and 
passes  the  check  on  to  the  filing  clerk. 

10.  The  filing  clerk  files  the  check  in  a  drawer  with  the  other  cashed  checks  of  the  maker. 
The  check  is  then  ready  to  be  returned  to  the  maker  (A)  whenever  his  Pass  Book  is  left  at 
the  bank  to  be  balanced. 

279.  Passage  of  a  Bank  Draft  from  the- drawer  through  the  banks  and  the  clearing  house. 

1.  A  wishes  to  send  B  in  Buffalo  a  New  York  draft  for  $500. 

2.  A  draws  a  check  for  the  amount  to  the  order  of  his  bank.  First  National  of  Chicago. 
He  presents  the  check  with  a  draft  requisition,  properly  filled  out,  to  the  draft  clerk, 

3.  The  draft  clerk  enters  the  draft  requisition,  issues  the  draft  on  the  Chemical  National 
Bank  of  New  York,  and  gives  it  to  A  with  the  requisition,  with  instruction  to  take  it  to  the 
cashier  to  be  signed. 

4.  The  cashier  after  signing  the  draft  returns  it  to  A,  and  places  the  requisition  on  a 
spindle  for  the  general  bookkeeper. 

5.  The  general  bookkeeper  credits  the  draft  requisition  to  the  account  of  the  Chemical 
National  Bank. 

6.  A  indorses  the  draft  to  B  and  mails  it  to  Buffalo. 

7.  B  deposits  the  draft  in  his  bank  (Buffalo  National  Bank). 

8.  The  Buffalo  National  Bank  credits  B's  account  with  the  amount  of  the  draft,  which  it 
mails  to  its  New  York  correspondent,  Second  National  Bank  o.f  New  York,  charging  it  with 
the  amount. 

9.  The  Second  National  Bank  credits  the  Buffalo  National  Bank  with  the  draft,  and  pre- 
sents the  draft  the  next  morning  at  the  clearing  house,  where  it  is  passed  on  to  the  settling 
clerk  of  the  Chemical  National  Bank. 

10.  The  Chemical  National  charges  the  draft  to  the  First  National  Bank  of  Chicago,  their 
correspondent,  and  mails  it  with  others  to  the  drawer  (the  First  National  Bank  of  Chicago). 


THE    VOUCHER   SYSTEM 


181 


SECTION  II.     THE  VOUCHER  SYSTEM 

280.  The  Voucher  System  makes  use  of  a  special  form  of  receipt  known  as  a  voucher  in 
connection  with  each  disbursement  or  payment  of  money. 

In  order  to  be  complete  this  system  must  make  use  of  the  voucher  blanks  and  a  Voucher 
Register,  together  with  a  regular  set  of  books ;  many  houses,  however,  omit  the  register. 

281.  The  Vouchers  are  printed  and  ruled  to  suit  the  requirements  of  the  business.  Some 
firms  have  printed  on  their  vouchers  the  names  of  many  representative  accounts  which  are 
likely  to  be  chargeable,  and  amounts  are  charged  on  the  Cash  Book  direct  to  these  accounts 
when  no  account  is  desired  with  the  person  or  firm  in  whose  favor  the  voucher  is  made.  The 
unpaid  vouchers  are  filed  alphabetically  in  a  drawer  and  are  not  folded  until  ready  to  be  paid, 
but  when  receipted  tliey  are  folded  and  filed  numerically  in  boxes  for  future  reference. 

Note.  —  Large  houses  have  their  Cash  Books  ruled  to  order,  having  as  many  columns  as  desired  on  the  credit 
side  and  on  the  debit  side,  for  representative  accounts,  thereby  curtailing  the  work  of  posting.  The  total  amount 
of  each  of  these  columns  is  posted  usually  at  the  end  of  the  month;  but  daily  in  a  house  whose  head  bookkeeper 
keeps  a  separate  (private)  set  of  books.  The  number  of  each  voucher  is  entered  as  part  of  the  explanation  in  the 
Cash  Book  and  also  in  the  Ledger  when  posting. 

Voucher 


Face 


BURRY  MNFG.    COMPANY 


Voucher  No.  1. 

To  PiCKANDs,  Brown  &  Co., 

Chicago. 

$650.75 
,  For  month  of  December,  1901. 


CHARGEABLE 


Factory  Expense 
General         " 
Traveling      " 
Material 
Voucher  % 
Labor 
Paymaster 


PAID  AS  follows; 


Date,  Jan.  3 
Voucher 
Rea:.  Page  1 


Check  No.  1 
Contra  Acct. 
Total 


650 


650 


650 


Attach  Here 


BURRY    MnFG. 

Company, 
Chicago,  111. 


Chicago,  January  3,  1902. 

To  PicKANDS,  Brown  &  Co., 

Chicago. 


Dec. 


Per  Invoice  rendered 


500 
150 


650 


75 


Examined  and  found  Correct, 

J.  C.  Merrill, 

Auditor. 


Approved  for  Payment, 

M.  A.  Burry, 

President. 


Received  January  3,  1902,  of  the  Burry  Mnfg.  Co., 


Six  hundred  and  fifty 
in  full  of  the  above  Account 
$650.75. 


7.5 


Dollars, 


PicKANDS,  Brown  &  Co. 

c.s. 


Instriictions.  — Please  date  and  sijrn  this  Voucher  and  return  without  delay  to  above 
address.     If  amount  is  not  satisfactory,  return  without  alteration  for  correction. 


182  APPENDIX 

282.  Invoices.  —  Wheu  voucliering  invoices  give  each  date  and  amount,  and  if  any  discount 
or  credit  is  allowed  deduct  it  on  the  voucher.  Many  firms  have  the  invoices  and  statement 
pasted  on  the  voucher,  and  others  file  them.  The  invoices  are  generally  vouchered  and 
recorded  in  the  Voucher  Register  on  the  last  day  of  the  month,  unless  they  are  paid  or  dis- 
counted during  the  month. 

283.  The  Voucher  Register  contains  a  record  of  each  voucher,  consecutively,  beginning 
with  number  1.  The  book  is  classified  as  a  Book  of  Original  Entry,  therefore  it  must  contain 
debits  and  credits  methodically  arranged  for  posting  to  the  Ledger.  The  special  columns  of 
accounts  chargeable  (debits)  are  arranged  and  named  as  the  business  requires. 

Arranged  in  this  form,  the  book  proves  of  great  value  in  a  large  firm  or  corporation, 
and  it  enables  some  firms  to  dispense  with  the  Journal.  However,  the  advantage  of  a  Voucher 
Register  depends  greatly  upon  the  line  of  business  engaged  in,  and  upon  whether  the  firm 
discounts  or  pays  all  bills  promptly  when  due. 

In  posting,  the  voucher  number  should  be  written  as  explanation,  in  the  Ledger  accounts. 

There  are  various  forms  of  the  Voucher  Register.  The  one  illustrated  on  page  183  dis- 
penses with  the  Journal,  if  desired. 

Note.  —  When  vouchering  Journal  entries — i.e.  the  miscellaneous  entries  that  require  no  cash  vouchers  — 
write  the  entry  and  the  full  explanation  on  the  inside  of  the  voucher,  in  the  same  manner  as  though  it  were 
a  Journal,  leaving  the  receipt  form  blank,  and  on  the  face  of  the  voucher  write  again  the  name  of  the  account 
which  is  to  be  credited,  or  the  word  "  Sundries  "  if  there  are  more  than  one  credit.  These  vouchers  are  then 
folded  and  filed  numerically  in  a  box  by  themselves,  apart  from  the  cash  vouchers. 

284.  The  uses  of  the  various  columns  in  the  Voucher  Register  shown  on  page  183  are  as 
follows  :  — 

1.  "Distribution  of  Credits."  —  These  columns  contain  all  the  credits. 

A.  The  Accounts  Payable  columns  contain  the  amounts  due  to  creditors. 

(1)  The  Cash  column  contains  the  amounts  which  are  not  to  be  credited  to  the  persons  or 
companies  in  whose  favor  the  vouchers  are  made,  because  no  accounts  have  been  opened  with 
them.  When  the  cash  is  paid  to  such  persons  and  companies,  they  are  not  debited,  but  the 
amounts  are  instead  charged  on  the  Cash  Book  direct  to  the  representative  accounts. 

(2)  The  Credit  column  contains  the  amounts  which  are  to  be  credited  in  the  accounts 
of  the  creditors. 

B.  The  Sundry  Accounts  column  contains  the  miscellaneous  credits  —  that  is,  the  amounts 
which  can  not  be  classed  under  Accounts  Payable.     (See  Journal  Voucher  number  1,  p.  183.) 

2.  "Distribution  of  Debits." — These  columns  contain  all  the  debits  (equal  to  the  credits 
in  the  Credit  and  Sundry  Accounts  columns).  The  total  amount  of  each  of  the  columns  (with 
the  exception  of  the  Sundry  Accounts  column,  whose  amounts  are  posted  daily)  is  posted  at 
the  end  of  the  month,  when  the  Ledger  page  number  is  written  under  each  column. 

3.  "Record  of  Settlements."  —  This  part  of  the  register  is  used  merely  as  a  reference 
showing  when  the  amounts  are  paid. 

Note.  —  Frequently  large  corporations  prefer  not  to  open  accounts  with  any  of  their  creditors ;  when  such 
is  the  case  the  Accounts  Payable  column  is  not  subdivided  into  "  Cash  "  and  "  Credit,"  nor  are  its  items  posted 
separately,  but  the  total  amount  of  the  column  is  posted  at  the  end  of  the  month  to  the  credit  of  Accounts  Pay- 
able account ;  and  in  the  Cash  Book  the  total  amount  of  the  Accounts  Payable  column  is  posted  at  the  close  of 
the  day  or  month  to  the  debit  of  Accounts  Payable  account.  Thus  the  Accounts  Payable  account  will  show  the 
balance  due  creditors. 

Exercises.  —  For  practice  in  the  use  of  the  voucher  system  forms,  the  student  should  use  the  transactions 
of  Set  IV,  —  the  business  of  the  C.  G.  White  Furniture  Co.  The  books  required  are  Check  Book,  Deposit  Book, 
Bill  Book,  Sales  Book,  Cash  Book,  Journal,  Voucher  Register,  Ledger,  and  50  voucher  blanks.  The  student  may 
rule  his  own  Voucher  Register  according  to  the  specimen  page,  allowing  five  pages  for  the  book.  As  there  are  so 
few  petty  cash  disbursements,  a  voucher  should  be  made  out  for  each  disbursement. 


THE    VOUCHER   SYSTEM 


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184 


APPENDIX 


SECTION  III.    THE   SAFEGUARD  ACCOUNT  SYSTEM 

285.  The  Safeguard  Account  System  consists  of  a  complete  set  of  books,  of  which  the 
Journal,  Cash  Book,  and  Ledger  are  patented  and  copyrighted  as  to  their  rulings,  etc. 

The  theory  of  the  system  is  the  same  as  that  explained  in  this  text-book,  the  distinctive 
feature  consisting  of  some  of  the  rulings,  which  are  designed  to  do  away  with  the  monthly 
trial  balance.  The  rulings  of  one  of  the  Ledgers  are  arranged  so  that  the  name  of  the  account, 
instead  of  being  at  the  top  of  the  page,  is  at  the  left-hand  side.  The  Deposit  Ledger  on  page 
164  is  somewhat  similar  to  a  Safeguard  Ledger,  except  that  the  days  of  the  month,  instead  of 
being  printed  at  the  top  of  the  page,  are  usually  next  to  the  debits  and  credits  in  the  space 
above  each  account.  The  space  allowed  for  an  account  is  only  for  one  month's  business,  as 
indicated  by  the  name  of  the  month  at  the  top  of  the  page. 

The  books  can  be  proved  to  balance  the  last  day  of  each  month  by  footing  the  columns  of 
the  Books  of  Entry  and  making  the  summary  in  a  private  ledger,  ruled  for  that  purpose. 

SECTION  IV.  THE  CARD  LEDGER  SYSTEM 

286.  The  Cards  in  the  Card  Ledger  System  take  the  place  of  a  book  ledger.  They  are 
printed  and  ruled  to  order,  and  can  be  filed  alphabetically,  geographically,  or  numerically. 


Name 

Address 

Eating                                                        Eemarks 

Account  No. 
Card  No. 

Date 

Description 

Fol. 

>/ 

Debit 

Date 

DeBcription 

Fol. 

V 

Credit 



o 

THE    CARD    LKDGEli    SYSTEM 


185 


287.  The  Files  vary  in  size,  usually  holding  from  500  to  1000  cards.  The  numerical  sys- 
tem of  filing  is  used  most  extensively.  In  this  system  the  accounts  are  numbered,  and  when 
an  account  requires  more  than  one  card,  new  ones  are  placed  next  to  the  original,  and  marked 
"  Card  No.  2,"  etc. 


288.  The  Guide  Cards  in  a  file  project  above  the  others  at  the  left  end,  and  are  of  a  color 
different  from  that  of  the  Ledger  Cards.  In  the  numerical  system  the  guide  cards  show 
the  hundred  series  and  the  ten  series,  while  the  Ledger  Cards  designate  the  unit  series. 
When  the  cards  are  arranged  geographically,  the  guide  cards  designate  the  states  and  towns, 
and  when  tlie  arrangement  is  alphabetical,  the  guide  cards  show  the  letters  of  the  alphabet. 

289.  The  Index.  — In  the  numerical  system  a  Card  Index  is  used  to  show  the  number  of 
each  account.     No  card  index  is  required  in  either  tlie  geographical  or  the  alphabetical  system. 


186 


APPENDIX 


290.  Posting.  —  Posting  to  the  Ledger  Cards  is  done  in  the  same  way  as  to  a  bound  book* 
The  cards  to  which  entries  are  to  be  posted  are  taken  from  the  file  by  the  bookkeeper,  or  in 
large  houses  by  a  filing  clerk.  Great  care  must  be  exercised  in  properly  filing  the  cards.  A 
disarrangement  of  cards  in  the  numerical  system  is  easily  detected  because  the  last  figure  (unit 
series)  of  each  number  is  printed  on  a  projecting  part  of  the  Ledger  Card.  (See  illustration 
on  page  184.) 

291.  The  accounts  may  be  divided  among  two  or  more  files.  In  large  houses  the  accounts 
are  divided  into  numerous  files,  thereby  facilitating  the  work  whenever  statements  and  trial 
balances  are  drawn  off.  The  accounts  may  be  classified  as  follows :  Customers'  Accounts,  Pur- 
chase Accounts,  Doubtful  Accounts,  Closed  Accounts,  and  General  Accounts.  The  General 
Accounts  are  usually  the  representative,  partners',  and  traveling  agents'  accounts. 

Note. — The  card  system  is  used  for  various  records  besides  the  Ledger.  It  is  well  adapted  to  keeping 
record  of  the  stock,  cost  of  goods  manufactured,  quotations,  subscriptions,  catalogues,  circulai's,  contracts,  etc. 
The  best  method  of  filing  depends  upon  the  class  of  cards  and  the  line  of  business  engaged  in. 


SECTION  V.    THE  LOOSE-LEAF  LEDGER 

292.  The  Loose-leaf  Ledger  is  used  by  some  large  houses  in  place  of  a  bound  book. 

293.  The  Sheets  may  be  ruled  to  order  suitable  for  the  business.  The  sheets  of  the 
General  Ledger  are  usually  ruled  with  two  money  columns,  "  Charges "  and  "  Credits,"  while 
those  of  the  Customers'  and  Purchase  Ledgers  may  have  three  columns,  called  "  Charges," 
"Credits,"  and  "Balance."  The  Balance  column  is  generally  ruled  in  the  center  of  the  page 
between  the  debit  and  credit  columns.  In  this  special  column  the  balance  of  an  account  can 
be  noted  after  each  entry,  if  desired,  or  at  the  end  of  each  month. 

294.  Whenever  a  balance  in  the  Customers'  Ledger  happens  to  be  a  credit,  it  is  indicated 

in  red  ink  instead  of  black  ink.     A  similar  rule  obtains  in  the  Purchase  Ledger  when  an 

account  shows  a  debit  balance. 

General  Ledger 


Sheet  No. 

Account  No. 

Name 

Terms 

Address 

Date 

Folio 

Ok. 

Oharges 

Date 

Folio 

Ok. 

Oredits 

o 

o 

o 

o 

Customers'  or  Purchase  Ledger 

Sheet  No. 

Account  No. 

Name 

Terms 

Address 

Date 

Tolio 

Ok. 

Charges 

Balance 

Oredits 

Ok. 

Folio 

Date 

O 

O 

O 

O 

GLOSSARY  OF  BUSINESS   TERMS 


187 


295.  The  Binders.  Each  Ledger  has  usually  two  binders,  one  called  "Current  Binder" 
and  the  other  "Transfer  Binder.''  The  latter  contains  all  the  sheets  of  the  accounts  that  are 
closed.     A  key  is  furnished  with  each  binder  to  fasten  the  sheets  securely. 


296.    The  Filing.      The  sheets,  as  they  are  filled  out,  are  filed  alphabetically  in   their 
special  binders.     Each  binder  has  a  finger  index. 


SECTION  VI.    GLOSSARY  OP  BUSINESS  TERMS 


Acceptance.  —  The  act  of  the  drawee  writing  his  signa- 
ture on  the  face  of  a  draft  or  bill  of  exchange,  and 
thus  promising  to  pay;  the  paper  itself  when  thus 
indorsed. 

Accommodation  Paper.  —  A  note  signed  or  a  draft 
accepted  to  enable  the  payee  or  drawer  to  raise 
money  by  discounting  it;  the  maker  or  drawee 
receives  none  of  the  proceeds  and  there  is  in  reality 
no  "value  received." 

Account  Current.  —  An  open  account,  not  balanced. 

Account  Sales.  —  A  written  statement  from  a  com- 
mission merchant  giving  the  results  of  the  sale  of  a 
consignment. 

Accountant.  —  One  who  is  skilled  in  bookkeeping. 

Acknowledgment. —  A  receipt;  formal  admission. 

Appraisal.  —  The  act  of  estimating  a  value. 

Assets.  —  The  property  of  an  individual  or  company, 
including  all  the  real  and  personal  property,  debts, 
and  obligations  due  him  or  it. 

Assignment.  —  A  transfer  of  the  title  to  property. 
Sometimes  used  in  the  sense  of  the  general  assign- 
ment made  by  a  bankrupt  for  the  benefit  of  his 
creditors. 

Attachment.  —  A  written  instrument  by  which  a  de- 
fendant's property  is  brought  into  custody  of  the 
law. 

Auditor.  —  One  who  examines  accounts  and  ascertains 
their  correctness. 

Balance.  —  The  difference  between  the  two  sides  of  an 
account. 

Balance  Sheet.  —  A  specially  ruled  sheet  which  when 
filled  in  shows  the  exact  condition  of  a  business. 

Bank  Book.  —  Deposit  Book  ;  Pass  Book  ;  a  book  con- 
taining a  record  of  one's  deposits  in  a  bank,  the 
entries  being  made  by  the  bank,  but  the  book  being 
kept  by  the  depositor. 


Bankrupt.  —  A  person  who  has  failed  in  busines.s ; 
insolvent. 

Bill.  —  A  written  statement  of  goods  sold  or  of  services 
rendered. 

Bill  of  Exchange.  —  A  draft. 

Bill  of  Sale.  —  A  written  instrument  showing  the  trans- 
fer of  personal  property,  such  as  furniture  and  mer- 
chandise. 

Board  of  Trade. — An  association  of  merchants  organ- 
ized for  the  mutual  benefit  of  certain  commercial 
interests. 

Bond.  —  A  document  by  which  a  person  binds  himself 
conditionally  or  unconditionally  to  pay  a  certain  sum 
of  money ;  often  given  as  security  for  the  perform- 
ance of  a  contract.  A  corporation  bond  is  generally 
a  fractional  part  of  its  interest-bearing  obligations, 
secured  by  mortgage. 

Bonded  Goods.  —  Goods  kept  for  a  time  in. a  custom- 
house or  bonded  warehouse,  and  subject  to  duty,  the 
payment  of  which  is  secured  by  bonds. 

Bonus.  —  An  extra  amount  paid  in  addition  to  the 
stated  price. 

Capital  Stock.  —  The  amount  for  which  a  corporation 
is  incorporated. 

Capitalist.  —  One  who  makes  a  business  of  loaning  and 
investing  his  money. 

Cartage.  —  Charges  for  local  transportation  of  goods. 

Charge.  —  To  debit  an  account;  to  fix  as  a  price. 

Check.  —  An  order  on  a  bank  for  money,  made  by  a 
depositor. 

Collateral.  —  Property  placed  in  the  possession  of  a 
creditor  as  security  for  the  payment  of  a  debt. 

Commerce.  —  The  exchange  of  commodities  between 
different  countries  or  between  different  parts  of  the 
same  country. 

Commercial  Paper.  —  Paper  that  is  used  in  commerce  in 


188 


APPENDIX 


place  of  money,  as  notes,  drafts,  and  bills  of  ex- 
change. 

Commission.  —  A  charge  made  by  an  agent,  stock  broker, 
or  a  commission  merchant  as  his  compensation  for 
selling  or  buying  certain  property  —  reckoned  either 
as  a  percentage  of  the  price  or  as  a  fixed  charge  per 
unit  of  quantity. 

Company.  —  Several  persons  associated  in  the  transac- 
tion of  business ;  a  corporation  or  firm. 

Consignee.  —  One  to  whom  goods  are  consigned. 

Consignment.  —  (ioods  sent  to  an  agent  or  a  commis- 
sion merchant  to  be  sold  at  the  shipper's  risk. 

Consignor.  —  One  who  sends  a  consignment. 

Corporation.  —  A  company  of  persons  organized,  in 
accordance  with  a  special  law  of  the  state,  under 
a  charter  granted  by  the  constituted  authority. 

Creditor.  —  One  to  whom  a  debt  is  owed. 

Customhouse.  —  A  government  office  where  duties  are 
collected  on  goods  imported. 

Customhouse  Broker.  —  A  person  who  represents  im- 
porters at  the  customhouse. 

Days  of  Grace.  —  A  period  of  three  days  added  by  law  in 
some  states  to  the  time  specified  in  a  note  or  draft. 

Debtor.  —  One  who  is  indebted  to  another  person. 

Demand  (notes).  —  Due  when  presented. 

Deposit  Book.  —  Bank  Book. 

Dividend.  —  Part  of  the  profits  of  a  corporation  dis- 
tributed among  its  stockholders. 

Draft.  —  A  written  order  drawn  by  one  party  on  a 
second  to  pay  a  certain  sum  to  a  specified  person  or 
company  (the  payee). 

Drawee.  —  The  person  on  whom  a  draft  is  drawn. 

Drawer.  —  The  person  who  di-aws  a  draft. 

DuebUl.  —  A  written  acknowledgment  of  a  debt  that 
is  due. 

Duty.  —  A  tax  laid  on  foreign  goods  entering  the 
country. 

Equity.  —  An  owner's  interest  in  mortgaged  property. 

Exchange.  —  Bank  charges  for  collection  on  checks  and 
drafts.  A  general  term  for  bills  of  exchange,  drafts, 
checks,  etc. 

Exporter.  —  One  who  ships  goods  to  another  country. 

Express  Charges.  —  Charges  made  by  an  express  com- 
pany for  transportation. 

Free  Trade.  —  Trade  unrestricted  by  duties. 

Freight  Charges.  — Charges  made  by  a  railroad  or  other 
carrier  for  transportation. 

Firm.  —  A  partnership. 

Fiscal.  —  Pertaining  to  a  treasury,  as  the  fiscal  (finan- 
cial) year. 

F.O.B.  —  Free  on  board;  that  is,  with  no  charges  for 
transportation  to  the  place  mentioned. 

Fund.  —  A  sum  or  sums  of  money  set  aside  for  a  special 
purpose,  as  Surplus  Fund  or  Sinking  Fund. 

Goods.  —  F'urniture,  groceries,  textiles,  and  other  mer- 
chandise bought  and  sold  in  trade. 

Goodwill.  —  The  established  trade  of  a  business;  the 
tendency  of  its  customers  to  continue  to  buy  of  the 
same  firm.  The  good  will  of  an  old  and  prosperous 
business  is  sometimes  a  large  asset. 


Gross  Sales.  —  In  the  commission  business,  the  amount 
for  which  a  consignment  is  sold. 

Guaranty.  —  A  warrant  that  a  debt  will  be  paid  or  a 
duty  performed ;  an  agreement  by  a  third  party  that 
he  will  himself  be  responsible  for  the  debt  or  per- 
formance in  case  of  default  by  the  original  debtor 
or  contractor. 

Importer.  —  One  who  has  goods  brought  in  from  a 
foreign  country. 

Indemnity.  —  A  reimbursement  for  loss  or  damage. 

Infringement.  —  Act  of  violating  the  right  of  another, 
as  in  a  patent  or  copyright. 

Insolvency.  —  The  condition  of  a  person  or  company 
whose  assets  are  less  than  the  liabilities. 

Installment.  —  A  part  payment  of  a  debt. 

Inventory.  —  An  itemized  record  of  property  on  hand 
valued  at  its  present  or  cost  price.  Sometimes  applied 
likewise  to  a  statement  of  expenses  incurred  and  not 
yet  paid  or  charged  on  the  books. 

Invoice.  —  An  itemized  statement  of  goods  sold  to  a 
customer. 

Jobber.  —  A  merchant  who  buys  from  importers,  whole- 
salers, or  manufacturers,  and  sells  to  retailers. 

Joint  Stock  Company.  —  An  unincorporated  stock  com- 
pany, the  stockholders  of  which  are  individually 
liable  as  in  a  partnership. 

Judgment.  —  The  decision  of  a  court;  a  document  by 
which  the  court  declares  a  certain  sum  to  be  due 
from  one  litigant  to  the  other. 

Lease.  —  A  contract  granting  the  use  of  real  estate  for 
a  specified  time. 

Letter  of  Credit.  —  A  letter  authorizing  certain  banks 
to  allow  a  person  credit  for  the  amount  specified 
therein,  and  to  charge  the  payments  to  the  account 
of  the  bank  issuing  the  letter. 

Liabilities.  —  The  debts  of  a  business. 

License.  —  Permission  to  sell,  or  to  engage  in  a  certain 
line  of  business. 

Lien.  —  A  legal  claim  for  which  a  person's  property 
may  be  held  until  the  claim  is  settled. 

Manifest.  —  Itemized  statement  of  a  ship's  cargo. 

Mercantile  Agency.  ^-  A  firm  or  corporation  engaged 
in  ascertaining  for  its  subscribers  the  financial  status 
of  business  houses. 

Merchandise.  —  A  collective  term  for  the  articles  which 
a  merchant  buys  or  manufactures  for  sale. 

Money  Order.  —  An  order  for  the  payment  of  money  by 
a  post  office  or  an  express  company. 

Mortgage.  —  A  written  document  pledging  certain 
property  as  a  guaranty  for  the  payment  of  a  debt. 

National  Banks.  —  Banks  governed  under  acts  of  Con- 
gress and  controlled  by  thefedei-al  govei'nment. 

Negotiable.  —  Transferable  by  delivery  or  indorsement. 

Notary  Public.  —  An  officer  authorized  to  take  a  per- 
son's acknowledgment  of  his  signature  to  certain 
documents,  and  to  protest  commercial  paper. 

Overdraft.  —  The  balance  overdrawn  at  a  bank. 

Partnership. — Two  or  more  persons  associated  in  a 
business  enterprise  on  terms  arranged  by  contract. 

Par  Value.  —  Face  value ;  the  value  specified. 


SIGNS  AND  ABBREVIATIONS 


189 


Pass  Book.  —  Bank  Book. 

Premium.  —  The  amount  above  par  value ;  the  per- 
centage paid  for  insurance. 

Pro  Rata.  —  In  proportion  ;  according  to  the  interest  of 
each. 

Protest.  —  A  legal  notice  of  nonpayment  of  a  note, 
draft,  or  clieck. 

Protective  Tariff.  —  Duties  arranged  to  give  home 
manufacturers  an  advantage  over  foreign  manufac- 
turers in  the  markets  of  a  country. 

Rebate.  —  Money  refunded. 

Receiver.  —  A  person  appointed  by  the  court  to  take 
charge  of  the  affaii's  of  an  insolvent  person  or  com- 
pany, and  to  make  settlement  in  accordance  with  the 
court's  suggestion. 

Remittance.  —  Money  sent  from  one  place  to  another. 

Requisition.  —  A  demand  made  on  the  main  office  of  a 
business  house  by  a  department  for  goods  or  ma- 
terial that  it  requires. 

Salvage.  —  An  allowance  made  for  the  saving  of  wreck- 
age. 

Sinking  Fund.  —  A  fund  established  and  usually  in- 
creased regularly  in  such  manner  tliat  it  will  be 
large  enough  to  meet  a  certain  bond  or  other  • 
indebtedness  when  it  becomes  due. 


Solvency.  —  Ability  to  pay  all  debts. 

Statement.  —  A  copy  of  a  personal  account. 

Stock  Account.  —  The  investment  account  of  a  partner 

or  original  stockliolder  in  a  business. 
Stock  Book.  —  An  auxiliary  book  showing  a  complete 

record  of  all  the  stock  or  merchandise  on  hand. 
Stock  Broker.  —  One  who  deals  in  stocks  and  bonds  on 

a  commission. 
Stock  Exchange.  —  An  association  of  brokers  and  others 

who  deal  in  stocks  and  bonds. 
Sjrndicate.  —  A   company   of   capitalists   organized   to 

conduct  a  special  business  enterprise. 
Tariff.  —  A  list  of  duties. 

Teller.  —  A  bank  clerk  who  receives  or  pays  out  money. 
Trial  Balance.  —  A  statement  of  the  debit  and  credit 

balances  of  a  Ledger; 
Usury.  —  A  charge  for  interest  in  excess  of  the  \egdl 

rate. 
Voucher.  —  A  specially  printed  form  of  receipt  used  by 

a  corporation ;    any  receipt,  note,  check,  or  other 

paper  which   gives  evidence   of    the    payment    of 

money,  or  authority  for  an  entry. 
Waybill.  —  A  bill  used  by  transportation  companies 

to  describe  goods  in  transit. 


SECTION  VII.    SIGNS  AND  ABBREVIATIONS 


@ 


#  ■•  •  ■ 

#  .  .  . 

%  ov  acct. 
Acct.  Cur. 

Agt.  . 

Amt.  .  . 

Ans.  .  . 

App.  . 

Asst.  .  . 

Bal.  .  . 

bbls.  .  . 

bdls.  .  . 

bgs.  .  . 

bkts.  .  . 

bis.  .  . 

B/L  .  . 

B.O.  .  . 

Bot.  .  . 

B/S  .  . 

bus.  .  . 

bzs.  .  . 

C.     .  .  . 

Cash.  .  . 

C.B.  .  . 


At;  To. 

Cent;  Cents. 

Dollars. 

Per  cent. 

after  a  figure,  Feet. 

after  a  figure,  Inches. 

after  a  figure.  Pounds. 

before  a  figure,  Number. 

Account. 

Account  current. 

Agent. 

Amount. 

Answer. 

Appendix. 

Assistant. 

Balance. 

Barrels. 

Bundles. 

Bags. 

Baskets. 

Bales. 

Bill  of  lading. 

Back  order. 

Bought. 

Bill  of  sale. 

Bushel;  Bushels. 

Boxes. 

Cash  Book. 

Cashier. 

Cash  Book. 


C.H.      .     .     .  Courthouse;  Custom- 

ck Check.  [house. 

c/o  ....  In  care  of. 

Co Company. 

C.O.D.  .     .     .  Cash  on  deliveiy. 

Com.     .     .     .  Commission. 

Const.  .     .     .  Consignment. 

Cr Credit;  Creditor. 

cs Cases. 

Cts Cents. 

cwt.      .     .     .  Hundredweight. 

cy Currency. 

Dept.    .     .     .  Department. 

dft Draft. 

do Ditto;  the  same. 

doz Dozen  ;  Dozens. 

Dr Debit;  Debtor. 

ea Each. 

E.E.     .     .     .  Errors  excepted. 


E.  &  0.  E. 


Errors  and  omissions 

excepted . 
Esquire. 

et    cetera;      and    so 
Exchange.        [forth. 
Expense;  Express. 
Free  on  board. 


Esq.  .  . 
etc.  .  .  . 
Exch.  .  . 
Exp.  .  . 
F.O.B. .    . 

fol Folio. 

Frt Freight. 

ft Foot;  Feet. 

gal Gallon;  Gallons. 


hf.    . 

hhds. 

in.   . 

Ins.. 

Inst. 

Int.. 

Inv. 

Invt. 

I.O.U. 

J. 

lb.    . 

L.F. 

Mdse. 

Memo. 

No.  . 

N.O. 

oz.   . 

Payt. 

P.C. 


pes., 
pkgs. 
Reed. 
R.R. 


Shipt. 

Sund. 

Ult.. 

W.C. 

Y.C. 

yds. 


Half. 

Hogsheads. 
Inch ;  Inches. 
Insurance. 
Present  month. 
Interest. 
Invoice. 
Inventory. 
I  owe  you. 
Journal. 
Pound ;  Pounds. 
Ledger  folio. 
Merchandise. 
Memorandum. 
Number. 
New  Orleans. 
Ounce;  Ounces. 
Payment. 
Posting  check. 
Pieces- 
Packages. 
Received. 
Railroad. 
Sales  Book. 
Shipment. 
Sundries. 
Last  month. 
White  C. 
Yellow  C. 
Yards. 


INDEX 


Accommodation  note,  93,  129. 
Account,  5. 

Account  sales,  98,  99,  122. 
Account  Sales  Book,  122. 
Account  Sales  Journal,  123. 
Accounts,  described,  5-14. 

classified,  12-14. 
Accounts  payable,  30. 
Accounts  receivable,  30. 
Asset,  15. 
Asset  (resource)   inventory,   61,   64, 

131. 
Assignment,  107. 
Auxiliary  Books,  39-45. 

B 

Balance,  5. 
Balance  sheet,  67,  68. 
Balancing  the  cash,  56,  57. 
Bank  account,  44,  55. 

method  of  checking,  55,  56. 

monthly  memorandum,  56. 
Bank  (Deposit)  Book,  43. 
Bank  draft,  91. 

passage  of,  180. 
Bank  notices,  103,  104,  105. 
Bank  statement,  131. 
Banks,  159. 

board  of  directors,  159. 

books,  described,  160-165. 

cashier,  159. 

clearing  house,  177. 

office  staff,  159. 

president,  159. 
Bill  (invoice),  50,  85,  86,  182. 

stamp,  86. 
Bill  Book,  41,  42. 
Bill  of  exchange,  91. 
Bill  of  lading,  103. 
Bill  of  sale,  106,  107. 
Bills  Discounted  account,  160. 
Bills  Payable  account,  7. 
Bills  Receivable  account,  7. 
Binder,  69,  187. 
Blotter  (Daybook),  21. 
Bond,  99. 

Bond  Payable  account,  146. 
Bond  Record,  78. 


Bookkeeping,  5. 

Double-entry,  5. 

Single-entry,  73. 
Books,  closing  of,  60,  61-66. 
Books  of  Entry,  39,  67. 

described,  46-54. 
Books  of  Original  Entry,  39,  67. 
Business  statements,  67. 
"By,"  21. 

C     • 

Capital  Stock  account,  145. 
Card  Ledger  system,  184. 

cards,  184,  186. 

files,  185. 

guide  cards,  185. 

index,  185. 

posting,  186. 
Cash  account,  5,  6. 

balancing,  56. 
Cash  Book,  47,  48,  49,  54,  181. 

specially  ruled,  70,  71. 
Cashier  account,  163. 
Cashier  checks,  163. 
Certificate  of  deposit,  95. 
Certificate  of  Deposit  Register,  162. 
Certified  check,  95,  163. 
Certified  Checks  account,  163. 
Check,  94,  95. 

passage  of,  180. 
Check  Book,  44. 
Checking  a  statement,  59,  60. 
Checking  Book,  121. 
Checking  the  Bank  account,  55,  56. 
City  Ledger,  71. 
City  Sales  Book,  67. 
Classification,  of  accounts,  12,  13. 

of  balances,  15-18. 

of  books,  39. 

of  personal  accounts,  13-15. 
Clearing  house  (bank),  177. 

balance  ticket,  179. 

clerk's  statement,  177. 

credit  ticket,  178. 

proof,  179. 

settling  clerk,  177. 

settling  clerk's  statement,  178. 
Closing  the  books,  60. 

method  of,  61-66. 
190 


Collateral  note,  93,  94. 
Collateral  security,  94. 
Collection  and  note  teller,  160. 
Collection  Register,  161. 
Collection  Tickler,  162. 
Collections,  109,  165. 
Commercial  (negotiable)  paper,  107, 

165,  187. 
Commission  merchant,  121. 

books,  121. 
Common  stock,  151. 
Consignment,  99. 
Consignment  accounts,  14. 
Consignor,  99. 

Construction  Book,  132,  133. 
Contract,  132. 
Contract  account,  132. 
Contract  accounts,  132. 
Contract  Book,  134. 
Contract  Sales  Book,  134,  135. 
Contractor's  books,  132. 
Corporation,  144. 

accounts,  145,  146. 

books — how  opened,  151,  152. 

charter,  145. 

how  governed,  145. 

laws,  145. 

organization,  144,  145. 

subscription  list,  144. 
Country  Ledger,  71. 
Country  Sales  Book,  67. 
Coupon  bond,  99,  100. 
Credit,  5,  19. 

Credit  Journal,  71,  162,  163. 
Credit  memorandum,  88. 
Creditor,  13. 
Currency  check,  48. 
Customers'  accounts,  14. 


D 

Daily  cash  balance  sheet.  57. 
Daily  report  tickets,  151,  165, 
Day  of  maturity,  89,  109. 
Daybook  (Blotter),  21. 
Days  of  grace,  92. 
Debit,  5,  19. 
Debit  Journal,  162,  163, 
Debit  memorandum,  87. 


INDEX 


191 


Debits     and     Credits  —  how    deter- 
mined, 19. 
Debtor,  13. 
Demand  note,  92. 
Deposit  Book,  43. 
Deposit  Ledger,  164,  165. 
Deposit  tickets,  43. 
Depositors'  Daily  Balance  Book,  162. 
Detection  of  errors  (trial  balance), 26. 
Discount  clerk,  161). 
Discount  Register,  160,  161. 
Discount  Tickler,  161. 
Discounting  bills  or  invoices,  71. 
Discounts  of  notes  and  drafts,  109. 
Dividend  account,  145. 
Dividend  Book,  149. 
Domestic  paper,  165. 
Double-entry  bookkeeping,  5. 
Draft,  88,  90. 

bank,  91. 

sight,  88,  90. 

time,  89,  90. 
Draft  clerk,  160. 
Draft  Register,  162. 
Drafts,  collection  of,  109. 

journalizing,  34. 
Drawer,  88. 
Drawee,  88. 

E 

"  Earnings,"  61. 

Errors,  detection  of,  26. 

Expense  account,  6,  7. 

"  Expenses,"  61. 

Express  C.O.D.  envelope,  101. 

Express  money  order,  96. 


Face,  92. 

Financial  and  business  statements, 
66,  67. 

Foreign  bill  of  exchange,  91. 

Foreign  exchange  clerk,  160. 

Foreign  paper,  165. 

Freight  bill,  101,  102. 

Freight  receipt,  102. 

Fundamental  processes  of  bookkeep- 
ing, 5. 

G 

Gains,  8,  16,  67. 
General  bookkeeper,  160. 
General  Ledger,  71,  165. 
Glossary  of  business  terms,  187,  188, 

189. 
Gold  notes  (promissory),  93. 
Gross  sales  (amount),  99. 
Guaranteed  stock,  151. 
Guarantor,  109. 


Indexes,  72. 

Individual  bookkeeper,  160. 

Individual  Ledger,  165. 

Indorsed  note,  109. 

Indorsement,  forms  of,  108. 

Indorser,  109. 

Inland  bill  of  exchange,  91. 

Insolvent,  15. 

Interest  and  Discount  account,  7. 

Interest  Payable  account,  146. 

Inventory,  60,  61,  64. 

resource,  61,  64,  131. 

liability,  61,  64,  131. 
Invoice  (bill),  50,  86,  182. 
Invoice  Book,  41. 
Invoice  stamp,  86. 


Joint  note,  93. 
Journal,  19,  50,  51,  54. 

Account  Sales,  123. 

Credit,  71,  162,  163. 

Debit,  162,  163. 

General,  162. 

Sales,  69. 

Six-column,  71. 
Journalizing,  5,  18. 

general  rules  for,  19. 
Journalizing  drafts,  34. 

entries  for  the  drawer,  34,  35. 

entries  for  the  drawee,  35. 

entries  for  the  payee,  35,  36. 
Journalizing  notes,  32. 

entries  for  the  maker,  33. 

entries  for  the  payee,  32,  33. 
Judgment  note,  92,  93. 


Ledger,  24,  53,  54. 

City,  71. 

Country,  71. 

Deposit,  165. 

General,  71,  151,  165. 

Individual,  165. 

Private,  151. 

Purchase,  71. 

Sales,  71. 
Ledger  index,  72. 
Letter  of  credit,  106. 
Liabilities,  15,  66. 
Liability  inventory,  61,  64,  131. 
Loans  and  Discounts  account,  160. 
Loose-leaf  Ledger,  186. 

binders,  187. 

sheets,  186. 
Loss  and  Gain  account,  8. 
Losses,  8,  16,  67. 
Lot  number,  121. 


M 

Maker,  92. 
Margin,  126. 
Maturity,  89,  109. 
Merchandise  account,  6,  123. 
Messenger  (bank),  160. 
Minute  Book,  146. 
Money  orders,  96. 

Monthly    bank    account    memoran- 
dum, 56. 
Monthly  bank  statement,  131. 
Monthly  statements,  58,  59,  60. 
Mutual  savings  banks,  159. 

N 

National  banks,  159. 
Negotiable  paper,  107. 
Net  gain,  16. 
Net  loss,  16. 
Net  proceeds,  99. 
Note  (promissory),  92. 

accommodation,  93. 

collateral,  93,  94. 

demand,  92. 

gold,  93. 

joint,  93. 

judgment,  92. 

negotiable,  93. 

non-negotiable,  93. 
Notes,  collection  of,  109. 

journalizing,  32. 
Notice,  of  draft,  104. 

of  note,  104. 

of  overdraft,  103. 

of  protest,  104,  105. 

O 

Order  (sales)  blanks,  69. 
Order  Book,  39. 
Order  Book  (receiving),  40. 
Original  entry,  19. 
Overdrafts,  31,  163. 


Partners'  accounts,  13. 

Partnership  books  —  how  opened,  73. 

Pass  (Deposit)  Book,  43. 

Pay  Roll  Book,  45. 

Payee,  88,  92,  109. 

Paying  teller,  160. 

Personal  accounts,  13. 

Petty  Cash  Book,  41. 

Post  office  money  order,  96. 

Posting,  5,  24,  54. 

guide  for,  25. 
Posting  the  books  of  original  entry, 

54,  55. 
Power  of  attorney,  105. 
Preferred  stock,  151. 


192 


INDEX 


Present  worth,  8. 
Private  banks,  159. 
Private  Ledger,  151. 
Profits,  16,  67. 

Protest  for  non-payment,  104,  109. 
Purchase  Accounts  (Purchase  Ledg- 
er) account,  71. 
Purchase  Ledger,  71. 

Q 

Questions,  18,  24,  27,  45. 
Questions  for  discussion,  28,  58,  110, 
121,  132,  144,  158,  159. 

R 

Receipt,  96,  97. 

Receiving  Book,  40. 

Receiving  teller,  160. 

Red  ink,  when  used,  12,  21,  61. 

Registered  bond,  99. 

Renewals  of  notes  and  drafts,  110. 

Representative  accounts,  12. 

Resource  inventory,  61,  64,  131. 

Resources,  15,  66. 

Rulings,  12,  21. 

S 
Safeguard  Account  system,  184. 
Sales  account,  6,  123.  . 
Sales  Accounts  (Sales   Ledger)   ac- 
count, 70. 
Sales  (order)  blanks,  69. 


Sales  Book,  46,  54,  69. 

Sales  Journal,  69. 

Sales  Ledger,  71. 

Sales  Register,  69. 

Scratcher,  165. 

Settling  clerk,  177. 

Share,  145. 

Shipping  Book,  41. 

Sight  draft,  88,  90. 

Signature  Book,  162. 

Signs  and  abbreAdations,  189. 

Single-entry  bookkeeping,  73. 

Sinking  Fund  account,  146. 

Six-column  Journal,  71. 

Solvent,  15. 

Special  Books  of  Entry  named  and 

defined,  67-71. 
Specially  Ruled  Cash  Book,  70,  71. 
State  banks,  159. 
Statement,  58,  59,  98. 

monthly,  58. 

of  losses  and  gains,  67. 

of  resources  and  liabilities,  66. 

of  trial  balance,  30. 
Stencil,  124. 
Stock,  kinds  of,  151. 
Stock  account,  8. 
Stock  certificate,  99,  100,  147. 

assessable,  147. 

method  of  canceling,  150,  151. 

non-assessable,  147. 
Stock  Certificate  Book,  146. 


Stock  Dividend  account,  146. 
Stock  Record,  78. 
Stock  Register,  147. 
Stockholder,  145. 
Stockholders'  books,  146. 
Stockholders'  Ledger,  149,  150. 
Subscription  account,  145. 
Sundries,  20. 
Surplus  account,  145. 
Suspense  account,  79. 
Suspense  Ledger,  80. 


Taking  off  a  statement,  58. 
Time  draft,  89,  90. 
"To,"  21. 

Transfer  Record,  148. 
Traveling  agents'  accounts,  13,  14. 
Treasury  Stock  account,  145. 
Trial  balance,  9,  26,  27. 
detection  of  errors,  26. 
Trustee  account,  145. 


Voucher,  97,  181. 

Voucher  account,  183. 

Voucher  Register,  182,  183. 

Voucher  slip,  84. 

Voucher  system,  181,  182,  183. 

W 

Watered  stock,  151. 


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